UNIVERSITY  OF  CALIFORNIA 
AT   LOS  ANGELES 


PROBLEMS  IN 
SALES  MANAGEMENT 


HARRY  R.  TOSDAL,  Ph.  D. 

ASSISTANT    PROFESSOR    OF   MARKETING 
DIRECTOR    OF   STUDENT   RESEARCH 

GRADUATE   SCHOOL,   OF   BUSINESS   ADMINLSTBATION 
HARVARD   UNIVERSITY 


NEW  YORK 


8693 


A.  W.  SHAW  COMPANY 
CHICAGO 


LONDON 


COPYRIGHT  1»41 


A.  W.  SHAW  COMPANY 


PRINTED    IS    TUE    UNITED   STATES   OF   AUERICA 


T  <^5., 


PROBLEMS  IN 
SALES  MANAGEMENT 


CONTENTS 

Table  of  Problems v 

H      Part         I.  Introduction.     The    Field    of   Sales 
•■  Management 1 

^     Part        II.  Sales  Organization 23 

X     Part      III.  Sales  Planning  and  Research 135 

Part      IV.  Sales  Policies 215 

Part        V.  Sales  Methods 313 


J 


Part      VI.  Sales  Operations — Management  of 

Sales  Force 413 


Part     VII.  Control  of  Sales  Operations 507 

Part  VIII.  Financing  of  Sales 535 

Part      IX.  Delivery  of  Orders 559 

Part        X.  Administrative  Policies  Affecting 

Sales  Management 583 

Bibliography 607 

Index    * .   (537 

i 


TABLE  OF  PKOBLEMS 


TABLE  OF  PROBLEMS 

1.  Location   of   Sales   Headquarters — Shoe    Manufac- 

turers    'M) 

2.  Location  of  Sales  Headciuarters — Garment  Manu- 

facturers     32 

3.  Location  of  Branch  Offices 32 

4.  Location  of  Branches — Machinery  Manufacturer.  .  35 

5.  Location  of  Warehouses 36 

6.  Sales  ())'<;anization — Conflictinji;  Authority 37 

7.  Line-and-Staff  Oi-jianization^ — Steam-Fittings  Manu- 

facturer     39 

8.  Changing  Line  to  Line-and-Staff  Organization 41 

9.  P'unctional  Organization — Rubber  Manufacturer  .  .   41 

10.  Functional  Oi'ganization — Contact  with  Customers  43 

11.  Committee  Organization — Pajjcr    Products   Manu- 

facturcn- 44 

12.  Conunittec    Type    of    Organization — Soaj)    Manu- 

facturer    47 

13.  Decentrahzation     of      Sales      Organization — Office 

Equipment    Manufacturer 49 

14.  Departmentalization  of  Sales  Organization — Rubber 

Manufactui-er 50 

15.  Sales  Departmentalization — Sales  Agents 51 

16.  Product  Sales  Manager 52 

17.  Sales     Organization — Financial     Limitations — Ma- 

chinery   Manufacturer 53 

18.  Sales   Organization — Financial    Limitations — Flour 

Manufacturer 54 

19.  Manufacturer  to  Retailer  Sales  Organization 55 

20.  Organization  for  Sales  to  Manufacturers 56 

V 


vi       ri{<)i'.i,i:Ms  i.\  sALi;s  manac;i:mkn r 

21.  Sales  (  (iiTMiii/at  ion      Biscuit    Mamifact  uicr 57 

22.  Slwipiiifi  the  ( )ijj;aiiizali()ii  to  l'ro\i(lc  for  I'lxpaiision 

— Aiif<>iiiol)ilc  Mamifacluici-  58 

'2'A.     .Adapting  Sales  ( )riiaiii/,at  ion  to  Ndlunie  of  liu.siiicss  60 

21.      .Vdjustiiiu;   Sales  ( )i^ani/ation   to   Incicase  of  Pro- 
duel  i\'e  ( 'apaeity  t)l 

2").      Sales  (  )i^;ain/.at  ion  for  ('ontraet  Sales ('»2 

2().      Sales  ( )i'^anizat  ion      'Txpe  of  (  iislonier  f"))^ 

27.      Functions  of  the  Sales  .Manajicr  ()4 

2S.     (^ualilications  of  Sale>  I'Aecutix'es  07 

20.     Sales  Manager  in  Wholesale^  ( "oneern      ()9 

30.     Sales  <  )rjranizat  ion     .Selection  of  Sales  Manager.    .  70 

M.     nuti(>s  and  .Vuthoiity  of  Sales  Manajrors,  Branch 

Manafrers  and  SalcsnuMi 71 

■S2.     ()rj>;anization  for  Sup;M'visi()n  of  Salosmeii 72 

33.     Qualifications  of  Salesmen 73 

'M.     Specialty  Salesmen 75 

35.  .lunior  Salesmen 76 

36.  Jo!)  .Vnalysi.s 78 

37.  Selection  of  Salesmen  by  Inf?i-vie\v 82 

3">.     S;il?>in  'a's  Api)lieatioii  Blanks 84 

39.     Selection  of  Salesmen — Rating  Scale 88 

10.     HatiiiR-  Scales 90 

41.  S(>lection  of  Salesmen— 'rvpewiitiM-  Manufacturer  91 

42.  Selection  of  Salesmen      \'entilatin^:Syst(»ms  Mami- 

facturer 94 

43.  Selection  of  Salesmen — Paint  Manufacturer 94 

\\.      l'!stal)lislinient  of  Branch  Sales  Office — Shoe  Manu- 
facturer    95 

45.  Establishment  of  Branch  ( )fficc — Machinery  Manu- 

facturer      97 

46.  Establishment  of  Branch   Warehouse 97 

17.      Blanch  ( )i-^aniz:it  ion  —  Kubl»er  Mamifact  lU'er 99 


TABLE  OF  PROBLEMS  vii 

48.  Field  Organization — Electrical  Equipment  Manu- 

facturer    1 00 

49.  Branch  Organization 10,3 

50.  Relation  Between  Advertising  and  Selling  Depart- 

ments    107 

51.  Organization     of    Advertising    Department — Ex- 

amples    109 

52.  Organization   of   Advertising    Department — Com- 

mittee Type Ill 

53.  Organization  of  Advertising  Department — Use  of 

Agency 11,3 

54.  Relation  Between  Export  and  Domestic  Sales  De- 

partments— Functions  of  Export  Department..  114 

55.  Cooperation  Between  Domestic  and  Foreign  Sales 

Departments — Examples   of   Export   Organiza- 
tions    116 

56.  Organization  for  Sales  Promotion 118 

57.  Organization  for  Sales  Research 123 

58.  Organization  for  Management  of  Ci'cdits 124 

59.  Coordination  of  Sales  and  Production  Departments  127 

60.  Relation  of  Traffic   Depaitment   to  Sales  Organ- 

ization    130 

61.  Scope  of  Sales  Research  and  Planning 140 

62.  Sources  of  Infoi'mation 143 

63.  Control  of  Advertising 144 

64.  Desk  versus  Field  Research 145 

65.  L^se  of  Questionnaire 146 

66.  Adapting  Research  to  Specific  Enterprise 150 

67.  Sales  Research  for  Insurance  Company 151 

68.  Sales  Research  as  Basis  for  Selling  Problems  and 

Methods 151 

69.  Analysis  of  Product   152 

70.  Market  Analysis  for  Felt 153 

71.  Market  Analysi.s — Analysis  of  Selling  Points 154 


viii      im{()H1j;ms  in  salios  management 

7"J.     Aiijilysis  of  INoducts  155 

7'.\.     Addition  of  New    l.iiics  156 

71.     Selection  of  New  Products  to  Eliminate  Seasonal 

I  )einand   I'^luct nations 157 

75.      Hesearcli  to  Dcteiniine  I'"ITect    of  Standai'dization 

of  Product  .  158 

7t).      Mliniinalion  of  ( )(ld  Si/es  and  Styles   .  .  .      .  159 

77.      Planning;  ( 'ontainer.  160 

7S.      Market  Analysis— Field  of  Demand 160 

79.      Heseaich  to  Determine  Stahility  of  Demand    .  .  168 

50.  Market  .\nalysis  for  Auto  .\ccessories 16.'^ 

51.  Market      Analysis — Office     Equipment      Manu- 

facturer    164 

82.  Market   Analysis— Mailinj^-Lists 165 

83.  Market  Peached  l.y  Adv(>rtisintr    166 

84.  Market  Analysis  foi- Stajjle  Product  and  Specialty  166 

85.  Anal>'sis  of  Market  foi-  Turbines 167 

86.  Market  Analysis    -  Work  ( larments 168 

87.  Kes(>arch  as  Basis  for  Distribution  Policy — Paper 

Products   Maiuifacturei- 169 

88.  Research  to   Determine  Tvpe  of   Dealer  to   Sell 

Product " 170 

89.  Research  to  Determine  Distribution  of  a  Product 

— Clock   Manufacturer 171 

90.  Analysis  of  Distribution 172 

91.  Research  to  Determine  Status  of  Distribution  .  . .  174- 

92.  •  Market  Research — Photographic  Product  Manu- 

facturer    175 

93.  Research    to    Determine    Method   of    Reaching 

Market 176 

94.  Sales  Districts — Ventilating  Equipment  Manu- 

facturer   177 

95.  Sales  Di.stricts 177 


TABLE  OF  PROBLEMS  ix 

96.  Kedistrictins  Sales  Territories 178 

97.  Districting  and  Routing  of  Salesmen 179 

98.  Sales  Districting — Billing  Machine  Manufacturer  182 

99.  Determining  Nunil)er  of  Accounts  to  be  Handled 

by  Salesmen 189 

100.  Laying    Out    Salesmen's    Territories,     Routing 

Salesmen 190 

101.  Sales  Districts — Soap  Manufacturer 192 

102.  Routing  Salesmen 193 

103.  Sales  Quotas — Adding  Machine  Manufacturer  . .  194 

104.  Sales  Quotas — Office  Supplies  Manufacturer  ....  195 

105.  Setting    Quotas    for    Salesmen — Watch    Manu- 

facturer    195 

106.  Relation  of  Quota  Assignments  to  Sales  Districts  197 

107.  Sales  Manual— Paper  Manufacturer 199 

108.  Sales  Manual— Automobile  Manufacture)' 200 

109.  Sales  Manual— Clothing  Mamifacturer 201 

110.  Sales  Manuals — Examples 202 

111.  Planning  an  Advertising  ('ampaign 204 

112.  Planning  to  Secure  Coordination  of   Sales    and 

Production 206 

113.  Scheduling  Shipment 208 

114.  Coordination  of  Sales  and  Purchases  in  Wholesale 

Diy-(l()ods  Concein 209 

115.  Sales  Campaigns 210 

116.  Guarantee  and  Replacement  Policy 219 

117.  Ctuarantee  Policy — Watch  Manufactiuvr  220 

118.  (luarantee    of    Pioduct — Confectionery     Manu- 

factuHM-   222 

119.  Product  (luarantee — Tire  Manufacturer 223 

120.  Policy  as  to  (^lality  of  Product— Union  Lab(>l  225 

121.  Quality  of  Product— Piano  Manufacturer 226 

122.  Style  Policy 228 


X  rK(»HIJ;MS   IN  SALKS  MANAGEMENT 

\'2:i.     I'olicv  as  to  (  uiiiplclc  Line—  l^illiiifT  I'-qnipTiiont 

Muimfactuici-  '2'M) 

\-2\.      I'llll-Lllir   I'clirv     231 

12').      Ailditioii   (il    New     Line     -Maliiltact  Ulilin  .lewder  232 

12(1.     .\ililiiiii  New   Lines     Shoe  Maiiutaeluicr 233 

127.      ('innplete  Line  in  NLiniii'acf urei's'  Hetail  Stores.  234 

I2n.      Sinii)lilication                235 

12!*.      Lliniinat  ion  of  Sizes  and  Styles 237 

130.     Service  I'oliey                     241 

13 L     Sales  PolicyManiitaetuicrs'  Brands 246 

132.  Private  Brands      240 

133.  Trade-Marks  for  Diffeicnt  (Qualities  of  the  Same 

Product 247 

134.  Brand  Poiicv — Using  Two  Brands  for  Same  Line 

of  Goods .' 248 

13.").     Distril.ution  Policy 250 

13().     Distrihution  Policy 252 

137.     Distrihution  Policy 252 

135.  Policy  as  to  Channels  of  Distrihution 254 

13!).     Distril)ution  Policy — Examples 254 

140.  Distribution  Policy — Soaj)  Manufactiuer 255 

141.  Distribution  Policy — Financial  Control 257 

142.  [distrihution      tluough      Manufacturers'      Retail 

Stores — Clothing  Manufacturer 259 

143.  Maiuifactuiers'    Hetail    Stores — Shoe    Manufac- 

turer    259 

141.      Lxelusive  Ajiencies 261 

14.').      Exclusive   .\genev — Laundiv    iMiuipmenl    Manu- 
facturer  " " 262 

146.  Attitude  toward  Newer  Type  of  Buyers 264 

147.  i*olicy  Beg.'iiding  ."^ale  to  ( 'hain  Stores 265 

1  is.     Policy  Hegaiding  Sale  to  Mail-Oriler  Houses  and 

( 'hains 267 


TABLE  OF  PROBLEMS  xi 

149.  Policy   Regarding  Sale  to  Mail-Order  Houses — 

Automobile  Accessory  Manufacturer 267 

150.  Sales  Policy— Wholesale  Grocers 268 

151.  Determining  Policj^  as  to  Price  Level — Beverage 

Manufacturer 269 

152.  Price    Policy — Gummed-Tape    Machine    Manu- 

facturer    270 

153.  Price  Level — Cooking  Compound  Manufacturer .  271 

154.  Price  PoHcy— Metallic  Filler  Manufacturer 272 

155.  Pricing  Discontinued  Parts  Made  to  Special  Order  273 

156.  Policy    of    Pricing    Special    Attachments    When 

Filling  Replacement  Orders 274 

157.  Cash  Discount  Policy — Rubber  Manufacturer.  . .  275 

158.  Cash  Discounts — Leather  Manufacturer 275 

159.  Price  Policy  in  Falling  Market 276 

160.  Reduction  of  Prices — Confectionery  Manufacturer  277 

161 .  Sliding  Discounts — Agricultural  Lnplement  Man- 

ufacturer    278 

162.  Trade  Discounts— Book  Publishers 279 

163.  Billing  Goods  at  Fictitious  Prices 280 

164.  Price  Policy 282 

165.  Quantity  Discount — Biscuit  Manufacturer 283 

166.  Quantity  Discount  vs.  Jobbers'  Discount 284 

167.  Price  Guarantee — Wholesale  Grocers 285 

168.  Price  Guarantee — Cotton  Manufacturers 286 

169.  Price  Guarantee — Policies  in  Various  Trades  ....  287 

170.  Uniform  Price  Policy — Secret  Discounts 292 

171.  One-Price  Policy— Wholesale  Grocers 293 

172.  Price-Cut  ting — Soap  Manufacturer 294 

173.  Price-Cutting — Discount  Policy 295 

174.  Price  Maintenance 296 

175.  PuhhCity  of  Price  Quotations— Dry  Goods 297 


xii  1M{()HLI;MS  IX  SALlvS  MAXACJEMENT 

17(i.  Piil.licity  (.f  ('(.sis.  298 

177.  (  )|»(ii-l'ri(c  Associations  299 

I7s.  I  )i(>|)-Slii|)iMciit  l'()lic>-                        300 

179.  Sales  Policy    -  Textile  .Maniifacturcis 302 

150.  policy  Pe^raifJiiiu  Sejliii^^  on  .Mcnioiandiini  308 

151.  .\(|\-eit  isin)f  A|)|)io|)iiatioii  'M)\ 

152.  Policy  of  Delivery  Dates  to  Two  Distinct  Types  of 

Customers  InvoKMnp;  Ciiculation 306 

183.  ( 'ancelations^ — Sufj;ar  Kefininfi  ( "onceni 307 

184.  i'olic\-  as  to  Cancelation   Clause   and    Keciuiiing 

Sifr'ncl  Orders                                   308 

18.3.  Policy  as  to  Claims  and  .Adjustments — Tire  Man- 
ufacturer    309 

186.  Heturned-Coods  Policy — Wholesale  Grocer 310 

187.  Introducing;  a  New  J^randed  Shoe 317 

188.  Correlating  Advertising  Campaign  with  Personal 

Sale.sman.ship 320 

189.  Missionary  Salesmen 321 

190.  Pooling  Force  of  "Missionary"  Sale.smen 322 

191.  Pooling  of  Sales  Forces — (!i-oceiy  .lot)l)ers 325 

192.  Distiihuting  T'loui' 327 

193.  Demand  Creation 327 

194.  Mailing-Lists         .328 

19.").  Dist  rihuting.Manufactui'ers' Sani])les                 ...  329 

196.  Advertising  to  l\cnio\-e  Piice  Competition 329 

197.  Selling  a  Iligh-Priccd  Household  .\ppliance 330 

198.  Increase  of  Sales  Foice         .                  331 

199.  Securing    Distiibution    Through    W'holesaleis    in 

Competition  with  Private  Brands,  332 

200.  Select iiiii  Dealers    .  332 

201.  Huililing  Dealer  ( )rganization 334 

202.  Developing  (iood  Will .334 


TABLE  OF  PKOBLEALS  xiii 

208.     D('ve]oi)in^-    Good   Will  of  Distributors.     House 

Orjiaus 335 

204.  Retaining    Good    Will     of    Distiihutois    Diiriiifr 

Changes  in  Policy 387 

205.  Retaining  (lood  Will  of  Dealers 338 

206.  Dealer  Helps 340 

207.  Dealer  Helps— Vacuum  BoUle  Mainifacturer  .  ,  .   341 

208.  Promotion  of  Sales  by  Means  of  \'isits  of  Cus- 

tomers to  Plant .  .  . ". 341 

209.  Securing  Jobber  Good  Will  for  Producer's  Brand.  342 

210.  Retaining  Good   Will  of    Dealers   when    Placing 

Improved  Product  upon  Market 343 

211.  Cooperation  with  Dealer  in  Local  Advertising..  .  344 

212.  Local  Advertising  for  Manufacturer's  Brand.  .  .  .  346 

213.  Distributing  Dealer  Helps 347 

214.  Securing  Utilization  of  Dealer  Helps 347 

215.  Bonuses   Given    by   Manufacturers   to    Jobbers' 

Salesmen 349 

216.  Training  Retail  Sales  Force  to  Sell  Manufactur- 

ers' Product 349 

217.  Budgeting  Sales  and  Profits  for  Jobbing  Repre- 

sentatives    350 

218.  Consignment  Methods  as  Means  of  Controlling 

Policies  of  Distributors 351 

219.  Sales  Contract  with  Lai-ge  Consumers 352 

220.  Dealers'  Contract 855 

221.  Contracts  with  Distiibutors 356 

222.  Exclusive-Agency  Contracts 363 

223.  Sales  Contracts  for  Canned-Goods  Futures 865 

224.  Future  Sales  Contracts  for  Dried  Fruits 870 

225.  Sales  Contracts — Knit  Goods 871 

226.  Sales  Contracts — Cotton  Textiles 878 

227.  Contracts  in  iron  and  Steel  Iii(lustr\-  ..  874 


xiv         l'H()HLi:.MS   IN  SALi;s  MANAGEMENT 

'J2S.  ( )r(l('is  of  Specialty  Salcsnicii 378 

220.  .I()l>l»('is'  Discounts     ( 'cical  Maiiufact  uicr 379 

230.  .lot)lM'i>-'  Discounts — Automobile  Accessories  .    ..  380 

231.  Hc.lu<-iim  Prices  t(.  Meet  ("oinpetilioii 382 

232.  Price  l^edu.t  ion  .  .  383 

233.  Price  Cuttinji  384 

'2'A\.  .Meetinji  ( 'ompet  it  ion  ot  Interioi' ( loods 384 

2.3").      Wholesale    (Jrocers    and    ( 'oinix't  it  ion    of    ("liuin 

Stores. .  .     385 

23().      Hetaiiiinfi     Dealer    ( iood     Will     when     Keducinfi 

Prices  389 

237.  Meeting  ( "onipetition  of  ( 'oopeiative  Producing 

Organization 390 

238.  Meeting  ("onipetition  of  Substitutes 390 

230.     Broken-Package  Hooni 301 

240.  Disj)osition  of  Surplus  Stocks 393 

241.  .\uction  Method  of  Disposing  of  Surplus  Stocks.    395 

242.  Follow-Tp  Letters  to  Correlate  Advertising  and 

Personal  Salesmanship 395 

243.  Methods  of  .Vvoiding  Loss  from  Obsolescence.    .  397 

244.  Claims  and  Allowances 398 

245.  Customer         Relationship — Cancelations — Paper 

Specialties  Manufacturer 400 

24b.     Customer  Relationship — Cancelations — Hardware 

Whole-aler  .  .  401 

247.  Relations  with  Competitors 402 

248.  Coordination  of  Sales  and  Pioduction 403 

249.  Sales  Practices 404 

250.  I'nfair  Trade  Practices 405 

251 .  Cnfair  Trade  Practices — Action  of  Federal  Trade 

( 'onunission  406 

252.  Special  Training  Schools 41b 


TABLE  OF  PROBLEMS  xv 

253.  Training       Salesmen — Automobile       Accessories 

Manufacturer 420 

254.  Training  of  Salesmen 431 

255.  Divisional  vs.   Centralized  Training  Course  for 

Salesmen 432 

256.  Training  of  Salesmen 433 

257.  Training  Salesmen — Adding  Machine  Manufac- 

turer    434 

258.  Salary-Plus-Commission  C^'ompensation  foi'  Sales- 

men     446 

259.  Reducing  Rate  of  Connnission '. 448 

260.  Compensation  of  Salesmen 449 

26 1 .  Salesmen's  Commissions  in  the  Wholesale  Gorcery 

Business 450 

262.  Salary,    Commission,   and    Bonus    Payment    for 

Salesmen 45IS 

263.  Bonus  Plan  for  Salesmen 454 

264.  Bonus  Plan  for  Salesmen — Shoe  Manufacturer. .  456 

265.  Profit  Sharing  for  Salesmen 457 

266.  Stimulation  of  Salesmen 460 

267.  Compensation     of     Salesmen — Wholesale     Dry- 

Goods  Concern 461 

268.  Compensation  for  Several  Classes  of  Salesmen  in 

the  Same  Concern 463 

269.  Compensation  of  Salesmen 464 

270.  Compensation  of  Sales  Force — Rate  of  Commis- 

sion    466 

27 L     Compensation  of  Salesmen 468 

272.  Contract  with  Salesmen — Cash  Register  Manu- 
facturer    47o 

273.  Compensation  of  Salesmen — Profit-Sharing  478 

274.  Method  of  Compensation 479 

275.  District  Sales  Directors 480 

276.  Organization  for  Field  Supervision  of  Salesmen  . .   484 


xvi        PKOBLKMS  IX  SALliS  MANAGEMENT 

277.  Miiiiajifiuciit  of  Sulcsiucii  486 

278.  Itatiii^  Employees  48b 

279.  Sak'siiicii  and  ( 'icdil  I  )c|)aiiiii('iil  487 

280.  Iruluciiiji  SalcsiiH'ii  to  Sell  Ilit^h-I'iofit  ( loods  488 
2S1.  ("oiitrol  of  Salcsiiicii — (^iiota  Sy.stcin  4H9 

282.  Maiiajiciiiciil  of  Salesmen — Shoe  Maiiufactiiicr  492 

283.  MaiuiKeinetit  of  Salcsnicn     Trial  Ordcis  493 

284.  Side-Lines  (>arriod  by  Salesmen  . .  494 

285.  hitensive  Use  of  Sales  Force 494 

286.  Drawing  Accounts  495 

287.  Daily  Reports  of  Salesmen 496 

288.  Supervision  of  Salesmen's  Expense  Accounts.  .  .  497 

289.  Use  of   Automobiles   by  Salesmen   and    Branch 

Managers 499 

290.  Tontrol  of  Salesmen's  Automobile  Expense  500 

291.  Sales  Conventions 502 

292.  Sales  Contests 503 

293.  Sales  Records 509 

294.  Sales  Expense,  Items  of 510 

295.  Total  Selling  Expense — Wholesale  Grocer 512 

296.  Figuring  Mark-up 513 

297.  Control  in  the  Wholesale  Dry  Goods  Business.  514 

298.  Sales  Control  System 517 

299.  Control  System  for  Grocery  Specialty  Company  522 

300.  Perpetual  Inventory 524 

301.  Sales  Control  for  Confectioner}'  Manufacturer  525 

302.  Control  of  Sales  by  Shoe  Manufacturers 527 

303.  Sales  Records  529 

304.  Administrative  Control   of   Sales   Department — 

Budget  System 530 


TABLE  (JF  PROBLEMS  xvii 

305.  Relation  of  Sales  Methods  to  Amount  of  Working; 

Capital  Recjuired 537 

306.  Relation  of  Sales  Methods  to  Opeiatiiio  Ratio         539 

307.  Prepayiiifj;  Freight  to  Branch  Houses 540 

308.  Trade  Acceptances 542 

309.  Terms  of  Sale 544 

310.  Interest  Charged  on  Past-Due  Accounts 546 

3n.  Handhng  Crechts 547 

312.  Handling  Credit  Apphcations — Wholesale  Grocer  549 

313.  Financing  Sales  of  Automobiles 550 

314.  Deferred-Payment  Plan 553 

315.  Financing  Sales  of  Motor  Trucks 554 

316.  Control  of  Packing  and  Shipping 561 

317.  System  for  Handling  Orders 564 

318.  Billing  System — Wholesale  Grocer 565 

319.  Manufacturer's  Order-Filling  System 566 

320.  Application  of  Scientific  Methods  to  Packing  and 

Shipping 570 

321.  Establishment     of     Warehouses     to     Facilitate 

Delivery 573 

322.  Reserve  Stocks  at  Branch  Offices 574 

323.  Priority  of  Parts  Orders  Over  Machine  Orders .         575 

324.  Standardization  of  Forms — Purchase  Order 576 

325.  Determination     of     Policy     by     Administrative 

Authority.     Selection  of  Sales  Manager 585 

326.  Administrative   Policy   Affecting  Sales — Confec- 

tionery Manufacturer 591 

327.  Scope  of  Administrative  Action 594 

328.  Sales  Development  as  Basis  for  Stock  Issue 596 

329.  Decentralization  of  Sales  Organizations  in  Indus- 

trial Consolidation 600 

330.  Organization  of  Separate  Corporations  to  Handle 

Sales 602 


PREFACE 

THE  modern  sales  executive  must  perform  his 
work  with  very  imperfect  equipment — im- 
perfect, partly  because  of  the  incomplete  de- 
velopment of  other  sciences,  notably  psychology; 
imperfect,  largely  because  of  the  lack  'of  scientific 
development  along  the  lines  of  distribution.  It  seems 
strange  to  the  observer  that  marketing,  when  under- 
stood as  including  the  creation  of  time  and  place 
utility,  should  have  suffered  such  neglect,  when,  from 
the  viewpoint  of  public  interest,  such  production  is 
always  important,  and  since  distribution  frequently 
takes  up  a  larger  portion  of  public  income  than  pro- 
duction of  form  utility.  In  other  words,  for  many 
commodities  the  costs  of  distribution  are  greater  than 
the  costs  of  manufacture  including  cost  of  raw  mate- 
rial. Although  distribution  costs  have  been  cut  down 
materially  in  the  course  of  the  last  two  or  three  cen- 
turies, no  sober  examination  of  present-day  facts  would 
lead  to  any  conclusion  other  than  that  of  the  need  of 
applying  every  means  to  the  reduction  of  distribution 
costs. 

The  first  step  is,  logically,  collection  and  classification 
of  facts;  the  second,  analysis  of  material,  and  conclu- 
sion; the  last,  the  apphcation  of  the  principles  derived. 
In  sales  management  the  collection  of  facts  has  just 
begun.  The  conclusions  which  are  drawn  are  neces- 
sarily tentative  and  are  to  be  used  only  as  guides  for 
action,  pending  more  definitive  solutions  to  come  when 
basis  of  fact  is  broader.  The  development  of  scientific 
sales  management  requires  concentrated  thought  and 
reasonable  procedure  on  the  part  of  every  sales 
executive  and  every  student  of  distribution  problems. 
To  develop  the  habit  of  passing  judgment  and  taking 
action  upon  the  basis  of  tangible  and  intangible  facts 


XX  PREFACE 

in  accordance  with  correct  principles  is  the  goal  of 
scientific  business  training.  It  is  our  conviction  that 
this  training  tliis  lKil)it  of  making  decisions  upon 
facts  and  evidence  rutiicr  llian  upon  guesswork — can 
be  best  accjuired  througli  considering  and  discussing 
problems  of  tlie  type  which  actually  confront  the  busi- 
ness man  in  the  course  of  his  activities.  It  is  evident 
that  there  is  an  infinite  number  of  ])ossible  combinations 
of  circumstances;  furthermore,  it  is  not  possible  through 
description  of  circumstances  to  convey  all  the  variations 
in  the  personal  factor. 

In  the  preparation  of  a  ])roblem  book  in  sales  man- 
agement one  is  confronted  with  the  difficulty  not 
only  of  collecting  and  selecting  problems,  but  also  of 
determining  and  delimiting  the  field.  While  the  writer 
is  inclined  to  favor  "marketing  management"  as 
indicating  more  clearly  the  scope  of  the  field,  usage 
favors  the  term  "sales  management."  This  volume  is 
the  result  of  an  effort  to  apply  the  problem  or  case 
method  to  teaching  the  principles  and  methods  of  sales 
management.  ]\Iany  of  the  problems  have  been  used 
successfully  in  the  sales  management  course  in  the 
Graduate  School  of  Business  Administration  at  Harvard 
University.  Problems  ha\'e  been  selected  with  a  view 
to  bring  out  the  "high  spots"  in  sales  management 
and  are  all  based  upon  the  experience  of  going  business 
concerns.  Names  have,  in  most  cases,  been  disguised 
in  order  to  avoid  disclosure  of  confidential  material, 
but  the  essentials  of  the  problems  and  relationships 
have  been  carefully  retained. 

Without  the  willing  cooperation  of  sales  executives 
and  officials  of  many  business  enterprises,  both  with 
the  writer  directly,  and  indirectly  through  the  Harvard 
Bureau  of  Business  Research,  it  would  have  been  im- 
possible to  complete  the  work.  The  assistance  ren- 
dered, and  the  spirit  of  helpfulness  behind  it  are  grate- 
fully acknowledged.  The  writer  is  especially  indebted 
to  the  Harvard  Bureau  of  Business  Research,  in  the 
persons  of  its  director,  Professor  Melvin  T.  Copeland 
and    special    agents    Richard    J.ennihan    and   Neil  H. 


PREFACE  xxi 

Borden  for  assistance  in  the  collection  and  preparation 
of  material;  likewise,  to  his  secretary,  Mrs.  Elsie  Hight 
Tarasoff  for  faithful  assistance  throughout  the  prepara- 
tion of  the  manuscript.  The  writer  wishes  also  to  ex- 
press his  gratitude  to  Dean  Wallace  Brett  Donham, 
without  whose  personal  interest  and  encouragement 
completion  of  the  work  at  this  time  would  not  have 
been  possible. 

Harry  R.  Tosdal 
Cambridge,  September  1,  1921. 


PART  I 
THE  FIELD  OF  SALES  MANAGEMENT 


PART  I 

THE  FIELD  OF  SALES  MANAGEMENT 

Si^LES  management,  as  the  term  has  come  to  be 
used  among  business  men,  comprises  the  field 
of  management  required  for  the  performance 
of  marketing  functions,  particular!}^  selhng.  The  point 
of  view  is  that  of  the  administrative  or  executive 
officers  of  a  business  enterprise.  Strictly  speaking,  it 
includes  the  management  of  both  foreign  and  domestic 
sales,  although  in  many  business  organizations  the  two 
are  separate.  Likewise,  sales  management,  using 
advertising  as  one  of  its  means  of  creating  demand, 
includes  the  management  of  advertising,  though 
similarly  in  business  organizations  the  development  of 
advertising  has  brought  many  concerns  to  accord  it  a 
coordinate  position  with  the  other  portions  of  the  field 
of  sales  management.  WTiile  the  principles  of  sales 
management  may  be  applied  to  retail  stores,  the  scope 
of  this  work  is  limited  to  sales  management  in  wholesale 
and  manufacturing  enterprises.  Sales  management  is 
not  coextensive  with  marketing  for  the  reason  that  it 
deals  only  with  those  functions  which  are  necessary 
for  the  distribution  of  goods  manufactured  or  purchased 
for  resale. 

The  prime  marketing  function,  according  to  one 
authority,  is  selhng  or  effecting  a  transfer  of  ownership 
of  merchandise  on  terms  which  are  satisfactory  to 
seller  as  well  as  to  buyer.  The  purpose  of  sales  manage- 
ment is  to  bring  about  the  performance  of  this  function 
at  the  lowest  possible  cost  consistent  with  continued 
profitableness  of  the  business- enterprise.  The  success 
of  a  concern  in  the  performance  of  the  selling  function 
is  dependent  in  varying  degrees  upon  the  performance  of 


2  I'KOHLK.MS  IN  SALllS  MANACiEMENT 

otlior  marketing;  I'uuctious,  particularly  if  wc  regard 
the  sal(\s  ileparliuoiit  us  responsible  for  the  performance 
of  all  functions  necessary  to  place  goods  purchased  or 
manufaclunHl  in  the  hands  of  consunHM's.  In  the 
creation  of  time  and  place  utilities  the  sales  dej)artment 
must  arrange  for  storage  of  finished  goods,  their 
movement  into  the  hands  of  the  customer  and  financ- 
ing within  the  limits  im})osed  upon  it  b}'  the  adminis- 
trative policy  and  action.  While  in  most  sales  organi- 
zations financing  is  handled  by  separate  officials  or 
separate  departments,  the  policies  and  methods  of 
any  company  with  respect  to  credits  and  terms  of  sale 
are  matters  of  the  highest  importance  to  the  sales 
department  in  the  performance  of  the  selUng  function. 
Frequently  wide  latitude  is  given  to  the  sales  depart- 
ment in  arranging  its  own  finances  within  the  general 
limitations  common  to  all  departments  and  necessi- 
tated by  the  requirements  for  proper  coordination  of 
the  varied  activities  of  a  business  enterprise.* 

Sales  organizations  vary  likewise  with  respect  to 
their  interest  and  authority  in  the  handUng  of  orders 
and  shipment  of  goods.  Both  as  to  polic}^  and  method, 
the  function  of  deliver}'  of  goods  seems  to  have  been 
neglected  by  the  sales  department  as  compared  to  the 
pure  selling  function.  In  the  study  of  stores  systems 
Uttle  attention  has  been  accorded  problems  of  handhng 
stocks  of  finished  goods,  and  the  manifold  problems 
in  coordinating  sales  and  production.  The  production 
department  has  frequently  operated  on  the  principle 
that  its  responsibihty  has  been  discharged  when  the 
goods  were  finished  and  ready  for  delivery;  since  the 
shipping  department  was  under  the  control  of  the 
production  department  and  was  used  for  inward  as 
well  as  for  outward  shii)ments,  the  sales  department, 
on  the  other  hand,  frequently  assumed  that  stock- 
rooms, packing  and  shipping  were  outside  its  province. 

*See  P.  T.  Chcrington,  Esseiitiah  of  Marketing. 

According  to  L.  D.  H.  Weld, -the  marketing  functions  are  assembling, 
storing,  assumption  of  risk,  financing,  rearrangement,  selling,  and 
transportation.  Of  these,  assembling  is  not  within  the  province  of 
sales  management,  while  rearrangement  or  grading  is  usually'  performed 
prior  to  purchase  or  prior  to  delivery  to  the  sales  department. 


THE  FIELD  OF  SALES  MANAGEMENT  3 

While  the  field  of  production  management  within  a 
manufacturing  plant  has  been  fairly  well  established, 
no  such  definition  could  be  given  for  sales  management 
as  applied  in  the  sales  department.  Sales  departments 
varj^  because  there  is  lack  of  any  common  conception 
of  the  functions  of  such  a  department.  In  some  firms 
the  sales  department  is  given  control  of  advertising; 
in  others,  not.  Some  Qoncerns  give  the  sales  executive 
control  of  credits,  others  accord  him  advisory  control, 
others  no  control  whatever.  In  some  concerns  the 
sales  department  takes  what  the  production  department 
chooses  to  turn  out;  in  others,  the  production  depart- 
ment makes  what  the  sales  department  orders.  Ac- 
cording to  the  broadest  view  the  work  of  the  executive 
head  of  the  sales  department  comprises  all  the  opera- 
tions necessary  for  disposing  of  goods  and  receiving  pay- 
ment therefor.  The  sales  organization  must  be  built, 
maintained,  and  operated.  Policies  must  be  formulated 
and  sales  methods  must  be  chosen  to  conform.  Sale 
must  be  made,  and  order  must  be  handled  in  such 
manner  as  to  win  good  will  for  the  company. 

The  application  of  the  principles  of  "scientific 
management''  to  sales  organization  and  operation 
requires  first  of  all  the  separation  of  planning  from 
performance  and  the  assignment  of  planning  to  sepa- 
rate individuals  wherever  possible.  The  idea  of  sepa- 
rating planning  and  performance  in  the  sales  depart- 
ment has  developed  very  slowly.  Only  within  the 
past  few  years  has  attention  been  drawn  to  the  possi- 
bilities of  research  and  planning  for  sales  operations. 
There  has  been  a  very  general  feeling  that  the  sales 
manager  dealt  entirely  with  imponderables,  with  fac- 
tors which  could  not  be  measured.  To  a  considerable 
extent  this  was  true.  The  sales  manager,  as  well  as 
any  other  executive,  must  deal  with  human  nature; 
perhaps  even  more  than  other  managers,  the  sales 
manager  has  been  required  to  deal  with  intangible 
factors,  because  the  performance  of  the  main  function 
of  the  selling  department  requires  the  acceptance  of 
ideas  by  prospective  purchasers  outside  the  particular 


4  PRomJlMS  IN  SALES  MANAdKMENT 

business  organization.  While,  by  the  law  of  averages, 
results  could  be  predicted  for  particular  experiments 
over  a  very  wide  field,  the  indixitlual  sales  manager 
is  rarely  in  a  i)osition  to  assume  that  his  particular 
field  was  sufficiently  typical  to  allow  prediction  of 
results  for  any  experiment  he  might  choose  to  make. 

The  separation  of  j)lauiiiug  and  performance  may 
be  apj)li(Ml  to  the  i)riniarv  function  of  selling.  Research 
and  ])lanning  have  been  used  successfully  in  the  shap- 
ing of  products  for  sale  and  in  selecting  and  directing 
methods  of  selling.  If  advertising  is  to  l^e  used,  the 
l)lanning  of  camj^aigns  and  media  and  schedules  can 
be  easily  separated  from  actual  copy-writing,  arrange- 
ment for  space,  and  control.  In  the  management  of 
salesmen,  districting  of  ten-itory,  and  routing  of  sales- 
men, planning  may  be  separated  from  actual  control 
while  operating  in  the  field.  E\'en  in  the  management 
of  financing,  i)lanning  is  becoming  more  common 
through  the  adoption  of  \'ariations  of  the  budget 
system.  By  proper  planning  and  arrangement  of 
terms  of  sale,  the  sales  managei-  determines  the  volume 
of  sales  which  can  be  financed  under  conditions  laid 
down  by  the  administration.  Likewise  in  delivery,  it 
is  possible  to  separate  planning  and  performance,  the 
planning  of  schedules  of  shipment  and  the  routing  of 
orders  being  distinguished  from  the  actual  filling  and 
shipment. 

Sales  policy  implies  the  development  of  standards 
for  practice  in  dealing  with  certain  situations  or  the 
development  of  standard  methods  and  conditions 
under  which  certain  operations  shall  be  performed. 
The  establishment  of  this  standard  practice  requires 
research.  Since  the  possibility  is  offered  of  separating 
the  functions  of  planning  and  performance  in  sales 
management,  it  follows  that  because  different  quali- 
fications are  required  for  the  two  tasks,  it  ma}'  be  wise 
(at  least  in  large  organizations)  to  have  separate 
planning  officials  in  the  sales  organizations.  \^niile  the 
planning  department  in  scientific  production  manage- 
ment   has    become    well    established    as    an    essential 


THE  FIELD  OF  SALES  MANAGEMENT  5 

feature,  the  movement  toward  the  estabhshment  of 
similar  departments  having  much  broader  functions 
than  the  sales  department  is  comparatively  recent. 
These  departments,  sometimes  called  "sales  research," 
sometimes  "sales  planning",  and  at  other  times  "sales 
promotion"  departments,  recognize  the  necessity  of 
particular  characteristics  for  such  work  as  well  as  the 
possibility  of  increasing  the  general  efficiency  of  a 
business  by  proper  planning  and  research. 

At  the  present  time  caution  must  be  exercised  in 
theoretical  discussions  of  research  and  planning  as 
applied  to  sales,  lest  we  lose  sight  of  the  nature  of  the 
data  with  which  the  sales  executive  has  to  work.  While 
it  cannot  be  denied  that  well-directed  sales  research 
and  sales  planning  departments,  may  do  much  for 
business  enterprise,  'the  limitations  of  sales  research 
and  planning  imposed  by  inadequate  information 
should  be  clearly  understood.  Otherwise,  one  may  be 
misled  b}^  a  false  appearance  of  accuracy.  The  logical 
viewpoint  seems  to  be  that  the  sales  executive  can- 
not afford  to  disregard  pertinent  facts  and  that  it  is 
his  duty  to  base  decisions  upon  such  facts  whenever 
they  are  attainable.  Rarely  will  all  the  desired  facts  be 
available,  but  the  knowledge  of  those  available  will 
in  proportion  to  their  completeness  limit  the  field  for 
errors  of  judgment. 

The  incomplete  development  of  business  science  is 
clearly  demonstrated  by  a  studj^  of  sales  management. 
The  absence  of  general  principles  and  the  lack  of 
collected  data,  upon  which  to  develop  principles  are 
shown  by  the  number  and  variety  of  problems  which 
present  themselves  to  sales  executives  and  the  utter 
lack  of  anything  approaching  a  scientific  standard  of 
practice.  There  is  no  single  correct  solution  for  many 
of  the  problems  in  sales  management;  the  successful 
solution  in  one  enterprise  may  be  unsuccessful  in  an- 
other. Nevertheless,  much  is  to  be  gained  if  students 
of  sales  management  acquire  the  habit  of  weighing 
alternatives  before  deciding.  Rule-of-thumb  decision 
is  becoming  dangerous  in  modern  business. 


6  PKolil.KMS  IN  SALES  MANACJKiMENT 

'rh(>  prohlonis  whicli  havo  l)eon  colloetod  have  been 
taken  from  study  of  goin^  business  enterprises  of  all 
sizes,  varying  from  the  small,  struggling  enterprise  to 
the  corporation  whose  capitalization  runs  into  the 
hundreds  of  millions.  The  attempt  has  been  made,  also, 
to  represent  a  variety  of  types  of  business,  including 
those  handhng  stai)le  products,  specialties,  and  materials 
used  by  manufacturers. 

The  problems  may  logically  be  grouped  as  follows : 

First:  Those  problems  of  administrative  policy 
which  determine  more  or  less  the  organization  and 
operation  of  the  sales  department.  For  pedagogical 
reasons,  this  section  is  placed  last  in  the  present  collec- 
tion. 

Second:  Probleiiis  dealing  with  building  or  re- 
shaping of  sales  organization  and  relation  of  sales 
department  to  other  departments. 

Third:  Problems  dealing  with  research  and  plan- 
ning as  a  basis  both  for  sales  policy  and  sales  operation. 

Fourth:  Sales  policj^  including  policies  as  to  prod- 
uct, policies  regarding  use  of  marketing  agencies  and 
relations  with  customers  and  competitors. 

Fifth:  Sales  methods,  including  methods  of  utilizing 
personal  salesmanship  and  advertising,  handling  rela- 
tions with  dealers  and  customers. 

Sixth:    Management  of  sales  force. 

Seventh:  Control  of  sales  operations.  Accounts, 
statistics,  records  and  reports. 

Eighth:  Problems  of  financing  as  related  to  sales. 
Terms  of  sales,  special  methods  of  financing. 

Ninth:  Problems  of  the  sales  department  in  de- 
livery of  goods. 

It  is  evident  that,  not  only  the  size  of  the  busi- 
ness and  its  total  financial  resources,  but  also  the 
portion  of  those  resources  allocated  to  the  uses  of  the 
sales  department  by  the  administrative  officers,  are 
of  prime  importance  in  determining  selling  policies  and 
methods.  Administrative  officers  limit  the  operations 
of  the  sales  department,  first  by  choosing  the  sales 
manager,  and  secondly  by  deciding  upon  the  relation- 


THE  FIELD  OF  SALES  MANAGEMENT  7 

ship  of  the  sales  department  to  other  departments  of 
the  business.  Administrative  decision  is  frequently- 
responsible  for  the  coordinate  authority  of  sales  and 
advertising  managers,  the  coordinate  authority  of  sales 
and  export  managers.  The  location  of  the  main  sales 
office  is  usuall}^  determined  for  the  sales  manager  by 
administrative  authority.  Furthermore,  the  adminis- 
trative heads  of  the  business  may  have  at  the  outset 
determined  that  the  product  is  to  be  sold  direct  to 
consumers,  by  mail-order  methods,  or  that  the  company 
is  to  do  no  advertising  or  is  to  undertake  special  national 
advertising  for  a  specialized  product.  It  is  evident 
that  the  sales  department  will  be  profoundly  affected 
by  any  such  decision. 

In  studying  the  problems  in  sales  organization,  the 
general  factors  which  influence  the  type  of  sales  or- 
ganization to  be  chosen,  the  methods  of  transmitting 
control  and  securing  the  benefits  of  specialized  knowl- 
edge and  ability,  are  of  particular  interest.  Location 
and  establishment  of  branch  and  district  offices  and 
warehouses  involves  a  series  of  problems  which  the 
sales  executive  is  frequently  called  upon  to  solve. 
More  than  one  concern  has  found  that  branch  offices 
were  an  expensive  luxury  and  that  the  adoption  of 
other  means  would  have  been  beneficial  from  the  view- 
point of  the  company's  welfare.  The  construction  of 
the  selling  plant  is  ordinarily  not  a  problem  of  particular 
magnitude.  It  has  been  possible  for  most  sales  or- 
ganizations to  secure  the  space  needed  either  at  the 
plant  or  in  the  city  selected  for  location;  in  fact,  many 
buildings  in  the  business  district  of  any  city  are  occupied 
largely  by  sales  organizations.  The  equipment  of  the 
selhng  plant  is  primarily  a  problem  of  office  manage- 
ment, except  as  it  pertains  to  the  handling  of  orders,  in 
which  case  material  and  goods-handling  equipment  will 
be  recommended  by  engineers. 

The  main  group  of  problems  in  the  building  and  re- 
shaping of  sales  organizations  concerns  personnel. 
While  in  the  smallest  organizations  the  usual  type  is  the 
familiar  military  or  line  organization,  as  a  business 


8  PK()liLi:MS  IX  SALi;s  MANAGEMENT 

develops  lliere  arises  tlie  necessity  of  reeop;iiizinp;  the 
a(lvaiitap;es  of  the  principles  of  the  division  of  labor 
throupli  functional  organization.  The  choice  is  open 
between  continuance  of  })ure  line  organization  and 
ad()j)tit)n  of  either  a  pure  ty])e  of  functional  organization 
or  a  combination  of  the  two  in  the  line-and-staff 
organization.  Likewise,  choice  must  be  made  between 
tlie  conunittee  type  of  organization  and  the  u.sual 
single-individual  arrangement.  Within  the  organiza- 
tion itself  decision  must  be  made  as  to  the  extent  to 
which  dejiartmentalization  of  sales  organization  is  to 
be  carried  out,  whether  groupings  are  to  be  made 
according  to  the  different  products  manufactured,  by 
the  concern  according  to  the  type  of  customers,  such 
as  wholesale  or  contract  customers,  classes  of  retailers, 
or  according  to  the  territory  in  which  groups  of  cus- 
tomers are  located. 

Given  the  general  type,  the  sales  organization  will 
be  modified,  first  of  all,  to  fit  the  size  and  financial 
resources  of  a  concern.  The  concern  selling  SlOO,- 
000,000  of  goods  in  a  year  will  require  a  different  or- 
ganization from  one  selling  .$100,000.  Again,  the  sales 
organization  should  be  adapted  to  the  methods  of  dis- 
tribution. While  for  many  products  there  are  tradi- 
tional methods  which  in  themselves  play  a  large  part 
in  the  shaping  of  the  sales  organization,  there  is  today 
a  marked  tendency  to  depart  from  traditional  channels 
of  distribution  and  to  adopt  new  methods. 

The  adoption  of  direct  sale  to  retailers  will  usual!}' 
require  an  organization  which  differs  considerably  in 
size  and  other  features  from  the  organization  of  a 
similar  concern  selling  only  to  wholesalers.  Lastly, 
sales  organization  must  also  be  modified  to  fit  the  type 
of  buyer  or  average  unit  sale.  It  makes  a  vast  difference 
to  the  sales  department  whether  for  an  annual  volume 
of  S50,000,000  there  are  100,000  orders  from  40,000 
customers  or  whether  there  are  100  customers  with  500 
orders  a  year.  In  the  first  case  an  extensive  sales 
organization  may  be  required;  in  the  second  a  very 
small  one. 


THE  FIELD  OF  SALES  MANAGEMENT  9 

The  chief  sales  executive  is  cliosoii,  of  course,  by  the 
administrative  officers,  from  whom  he  derives  his 
authority.  In  general,  his  title  will  be  given  in  this 
volume  as  "sales  manager,"  although  there  is  a  grow- 
ing tendency  to  make  the  chief  sales  executive  in  a 
corporation  a  vice-president  in  charge  of  sales.  The 
qualifications  of  the  chief  sales  executive  are  in  general 
the  qualifications  of  any  capable  executive.  The 
qualifications  required  for  the  sales  executive  of  a 
particular  concern  will  depend  to  a  considerable  extent 
upon  the  place  which  the  sales  organization  occupies 
in  the  business. 

As  a  starting  point  for  good  management,  whether 
in  production,  financing  or  sales,  knowledge  of  facts  is 
essential,  both  for  administrative  officials  in  the  prep- 
aration of  the  larger  plans  as  well  as  for  executives  and 
planning  officials  who  make  detailed  plans  to  carry  out 
major  policies  and  functions.  It  is  the  business  of  re- 
search to  obtain  these  facts.  The  results  of  such  re- 
search are  valuable  in  proportion  to  the  completeness 
of  facts  upon  which  conclusions  can  be  based  or  the 
extent  to  w^hich  facts  collected  are  typical.  The 
methods  of  scientific  research  in  any  social  science  in 
which  it  is  necessary  to  deal  with  huge  aggregates  or 
with  large  number  of  details  and  in  which  it  is  usuall}^ 
impossible  to  compile  details  covering  every  case  must 
be  employed  in  sales  research.  Much  use  must  be 
made  of  statistical  methods;  much  dependence  ]ilaced 
upon  averages  as  derived  from  obser\'ations  of  typical 
cases.  In  other  words,  trade  tests  and  samples  must 
be  widely  used  in  sales  management  and  sales  re- 
search because  of  the  impossibility  of  profitably  ob- 
taining a  complete  set  of  facts. 

Sales  research  is  commonly  classified  as  "Desk  Re- 
search" and  "Field  Research,"  the  distinction  depending 
upon  whether  an' attempt  is  made  to  secure  information 
through  questionnaires  and  examination  of  published 
sources  or  whether  personal  investigation  is  utilized 
either  to  obtain  new  data  or  to  corroborate  the  result 
of  desk  research.    While  no  sales  manager  can  overlook 


10       pi{()Hm:ms  in  salks  management 

the  advjiiilafi;('  of  liaving  such  information  as  can  be 
secured  from  puliHshed  sources,  too  nmch  stress  must 
not  he  laid  upon  its  resuHs.  Deductions  from  statistical 
data  \vh(Mi  used  for  sales  purposes  must  always  be 
influenced  by  knowledge  of  buying  habits  and  l)y  many 
facts  which  cannot  be  measured  statistically.  Esti- 
mates of  possible  sales  should  not  be  looked  upon  as 
more  than  estimates.  They  all  involve  an  element 
of  personal  opinion. 

Research  may  assist  in  determining  the  uses  of  a 
product,  thereby  increasing  the  field  for  sales  develop- 
ment. Research  may  furnish  the  facts  whereby  it  is 
possible  to  determine  a  policy  concerning  new  styles 
and  simplification  of  products,  the  addition  or  elimina- 
tion of  lines;  research  may  be  used  to  determine 
accurately  the  selling  points  of  a  product  and  the  sales 
value  of  a  container. 

The  most  difficult  problems  connected  with  research 
are  those  concerning  the  estimate  of  potential  demand. 
In  rare  cases  only  is  it  possible  to  get  more  than  a 
rough  estimate  of  the  demand  for  a  particular  com- 
modity for  an  individual  enterprise.  WTiile  it  may  be 
possible  to  detennine  the  amount  of  the  product  used  in 
the  course  of  the  year,  it  may  not  be  possible  to  deter- 
mine how  much  of  that  product  is  furnished  by  com- 
petitors. Even  if  these  facts  are  secured  with  some 
accuracy,  changes  in  industrial  conditions  may  influence 
the  demand.  An  estimate  of  the  potential  market  de- 
mand for  a  connnodity  requires  careful  study  and  ap- 
praisal of  a  variety  of  conditions  and  a  variety  of  facts. 

Research  may  be  used  to  determine  methods  of 
reaching  the  market.  A\Tien  channels  are  chosen 
through  which  goods  are  to  be  distributed  it  may  be 
possible  for  the  research  department  to  secure  names 
and  data  concerning  dealers  both  wholesale  and  re- 
tail as  well  as  concerning  consumers.  '  Upon  the  basis 
of  such  facts  the  efficiency  of  the  sales  department 
both  in  the  use  of  the  method  of  personal  solicitation 
and  advertising  maj'  be  increased.  In  planning  for 
sales  operations  research  will  furnish  data  for  laying 


THE  FIELD  OF  SALES  MANAGEMENT         11 

out  of  sales  districts.  The  work  of  the  field  force  may 
be  planned  so  as  to  secure  much  more  efficient  utiliza- 
tion of  time  and  expenditure  through  careful  routing 
of  salesmen,  careful  planning  of  eciuipment,  and  fixing 
of  standards  of  performance,  which  in  sales  are  usually 
called  "quotas." 

The  planning  of  an  advertising  campaign  and  its 
correlation  with  personal  salesmanship  depends  largely 
upon  the  information  furnished  by  sales  research,  a  fact 
which  accounts  for  the  maintenance  of  sales  research 
departments  by  man}-  of  the  larger  ad\'ertising  agencies. 
It  is  necessary  to  have  basic  facts  upon  which  to 
determine  the  advertising  media  to  be  used  and  the 
most  effective  ways  of  using  the  media  selected.  In 
planning  of  sales  campaigns  are  concentrated  most  of 
the  features  of  sales  research  and  planning  for  it  is 
necessary  to  secure  the  facts  by  which  to  determine 
methods,  and  to  plan  each  of  the  steps  of  the  campaign 
carefully  in  advance  of  execution  if  best  results  are  to 
be  obtained. 

Among  the  problems  in  sales  policy  which  confront 
the  sales  manager  are  those  connected  with  product 
guarantees  in  which  the  manufacturer  undertakes  to 
guarantee  the  quality,  durability,  and  service  rendered. 
Such  guarantees  offer  difficulties  which  sometimes  off- 
set the  selling  advantages.  Many  concerns  have  the 
problem  of  choosing  between  specialization  in  the  manu- 
facture of  a  single  product  or  manufacturing  several 
products  to  complete  the  line.  Textiles,  furniture  and 
other  enterprises  must  adopt  a  policy  as  to  style 
changes.  Manufacturers  of  more  durable  commod- 
ities which  are  liable  to  get  out  of  repair  are 
compelled  to  adopt  some  policy  as  to  repair  services 
and  repair  parts  in  order  to  maintain  the  good  will 
of  purchasers  and  eliminate  dissatisfaction  which  is  an 
obstacle  to  future  sales.  Other  manufacturers  must 
concern  themselves  with  brand  policy ;  whether  brands 
shall  be  used  to  identify  goods,  whether  separate  brands 
shall  be  used  for  different  lines  of  goods,  a  single  brand 
for  several  lines,  or  possibly  several  brands  for  one  line. 


12  rK()P.lJ;.MS  JN  SALKS  MANACKiMENT 

With  ic^aid  to  methods  of  distribution  the  inanu- 
facturci-  niust  liist  of  all  determine  his  policy  as  to 
channels  of  (list I'ihut ion.  lie  must  decide  whether  or 
not  he  will  use  the  ehamiels  which  the  majority  of 
manufacturers  have  select (m1  in  his  ])articular  line. 
If  the  dealer  sells  to  the  inde])endent  retailer,  he  must 
decide  whether  or  not  he  is  to  sell  to  competitors  of 
the  independent  retailer  such  as  mail-order  houses, 
chain  stores,  cooperative  stores.  If  the  product  of  the 
manufacturer  is  one  sold  to  other  manufacturers,  he 
must  determine  the  conditions  under  which  he  will 
make  contract  sales. 

Perhaps  the  most  difficult  ])olicies  to  decide  upon  are 
those  concerning  price.  While  in  the  long  run  eco- 
nomic forces  determine  price,  the  difficulty  of  determin- 
ing market  price  at  any  time  gives  a  wide  range  of 
choice  to  many  manufacturers.  Within  limits,  the 
manufacturer  must  determine  the  price  level;  whether 
he  shall  sell  at  the  market  price,  at  a  price  above  the 
market,  or. at  a  price  below  the  market;  in  the  terms 
used  by  Shaw,  "market  plus,  market  par,  or  market 
minus."  Having  determined  the  price  level,  he  must 
decide  whether  in  distributing  over  a  large  area  the 
prices  shall  vary  according  to  location.  He  must  de- 
cide whether  he  shall  adopt  a  uniform  policy  of  selling 
prices  or  allow  concessions  to  be  made  by  salesmen 
or  otherwise.  In  the  quotation  of  prices  it  may  be 
necessary  for  him  to  determine  whether  net,  list  or  de- 
livered prices  are  to  be  quoted.  For  quantity  sales  he 
may  find  difficult}^  in  deciding  whether  the  advantages 
of  ([uantity  discounts  are  sufficient  to  offset  the  possi- 
ble ill-will  of  smaller  distributors.  Furthermore,  the 
question  will  frequently  confront  the  manufacturer  of 
identified  goods  as  to  whether  he  should  attempt  to 
fix  a  resale  price  and  if  so  to  what  lengths  he  should 
go  in  the  attempt  to  enforce  it.  During  the  past  few 
years  considerable  public  attention  has  been  given  to 
the  question  of  price  maintenance  and  guarantee 
against  price  decline.  The  hearings  of  the  Federal 
Trade  Commission  revealed  such  variation  of  opinion 


THE  FIELD  OF  8ALES  MANAGEMENT         13 

that  it  was  found  impossible  to  take  a  definite  stand. 
In  many  industries  guarantee  of  prices  against  decline, 
is  still  a  vexatious  problem. 

The  length  of  credit  terms  is  determined  both  by  the 
custom  of  a  trade  and  the  financial  position  of  the  selling 
concern.  It  is  obviously  impossible  for  a  concern  with 
small  resources  to  extend  long  credit  terms  without  tying 
up  its  capital  and  impairing  its  efficiency.  On  the  other 
hand,  it  is  possible  for  a  concern  in  a  very  strong  posi- 
tion in  the  market  to  shorten  its  credit  terms  so  as  to 
secure  the  maxinmm  use  of  its  working  capital.  Ti-ade 
custom  will  likewise  have  great  influence  in  the  selection 
of  method  of  extending  credit,  whether  upon  open 
account,  on  a  sight-draft  basis,  trade  acceptances,  or 
otherwise.  An  integral  part  of  an}'  credit  policy  is 
the  policy  concerning  collections. 

The  policy  of  a  business  firm  concerning  ad\'ertising 
is  frequently  indicated  by  the  size  of  the  appropriation 
which  is  given  to  advertising.  Advertising  policy,  the 
featuring  of  particular  goods  or  particular  selUng 
points  is  intimately  connected  with  general  policies  of 
an  enterprise. 

At  the  close  of  the  period  of  prosperity  in  1920,  the 
flood  of  cancelations  and  large  amounts  of  goods 
returned  without  adequate  cause  induced  many  firms  to 
make  a  thorough  examination  and  overhauling  of 
their  policies  towards  customers.  Cancelations  re- 
ceived much  discussion  and  the  general  tendency  was 
to  adopt  a  policy  of  refusing  to  allow  cancelations 
while  at  the  same  time  making  numerous  exceptions 
where  it  appeared  that  circumstances  warranted  it. 
Much  the  same  might  be  said  of  returned  goods.  The 
policy  of  a  firm  in  regard  to  claims  and  allowances 
will  depend  to  a  large  extent  upon  its  previous  ex- 
perience, its  type  of  customers,  and  the  character  of 
the  goods  sold. 

In  the  operation  of  the  sales  department,  the  first 
and  foremost  function  of  the  sales  manager  is  that  of 
using  efficiently  the  means  of  selling  at  his  disposal. 
The    means   at   his   disposal   may    consist   mainly   of 


I  I  riiolilJOMS  IN  SALKS  MANAGEMENT 

advert isinp;  of  vai'ious  types,  and  personal  salesmanship 
in  its  \ari()us  forms.  Tiie  use  of  one  of  tliese  exclu- 
sively or  sueh  eomhination  of  the  two  as  appears  neces- 
sary constitutes  a  hivgc  piivi  of  the  work  of  the  sales 
executives.  When  ])ersonal  solicitation  is  to  be  used 
the  sales  manager  finds  that  many  methods  are  in  use, 
some  firms  using  regular  salesmen  to  solicit  orders, 
others  supplanting  or  supplementing  regular  salesmen 
with  a  "missionary"  or  non-selling  force  whose  object 
is  to  create  demand  which  is  to  be  filled  indirectly 
through  distributors.  In  introducing  a  new  product 
the  sales  manager  finds  a  chance  to  exercise  his  in- 
genuity in  de\'ising  variations  of  personal  salesmanship 
and  advertising  to  bring  about  sales  most  economically. 

Much  is  said  and  written  about  advertising  as  a 
means  of  creating  consumers'  demand.  The  creation 
of  consumer  demand  by  means  of  advertising  and 
personal  solicitation  has  become  the  fundamental 
policy  of  many  large  manufacturing  enterprises,  being 
regarded  as  a  means  of  insuring  the  continuance  of 
business  profits  and  as  a  means  of  obtaining  control 
of  dealers  and  distributors  w^hose  interests  are  fre- 
quently at  variance  with  those  of  the  manufacturer. 
While  the  attempt  to  create  consumer  demand  is  most 
common  among  manufacturers  of  finished  articles,  there 
has  been  some  evidence  of  a  tendency,  on  the  part  of 
manufacturers  of  materials  which  are  incorporated  in 
other  products  before  reaching  the  consumer,  to  attempt 
to  create  through  ad\'ertising  a  demand  for  such  parts 
as  a  means  of  developing  sales  to  wholesale  consumers. 
Consumer's  good  will  as  created  by  advertising  and 
other  sales  methods  is  valued  highly  by  business  con- 
cerns and  financial  statements  show  that  this  valuation 
is  often  reflected  in  the  balance  sheet.  Capitalization 
of  such  good  will  is  frecjuently  justified  by  business 
concerns  upon  the  ground  that  its  possession  enables  a 
manufacturer  to  effect  economies  in  distribution. 

The  creation  of  consumer  demand  is  useless  for  many 
commodities  unless  this  demand  can  be  filled  without 
much   trouble  by   the  average  consumer.     ^Moreover, 


THE  FIELD  OF  SALES  MANAGEMENT         15 

no  advertising  campaign  can  yield  its  full  benefits  to 
the  manufacturer  when  its  goods  are  not  sold  on  a 
mail-order  basis,  unless  it  is  possible  for  him  to  place 
his  product  with  distributors  in  the  areas  in  which  the 
demand  has  been  created.  When  an  exclusive  agency 
policy  has  been  adopted,  the  selection  of  distributors 
becomes  a  matter  of  importance  because  whether  manu- 
facturers wish  it  or  not  the  article  is  frequently  asso- 
ciated not  only  with  the  manufacturer's  name,  but  also 
with  the  dealer  from  whom  the  consumer  purchases 
the  product.  The  character  of  that  dealer  is,  therefore, 
of  interest  to  the  manufacturers  and  care  must  be 
taken  in  his  selection  and  development  so  as  to  fur- 
nish the  best  type  of  market  for  the  line. 

The  manufacturer  may  find  that  it  is  advisable  to 
use  some  sort  of  contract  or  agreement  with  distrib- 
utors. A\Tiile  such  contracts  are  not  used  in  many 
industries,  the  custom  has  been  developed  in  textiles, 
raw  materials,  grocer}^  futures,  of  utilizing  sales  con- 
tracts which  set  forth  clearly  the  terms  under  which 
orders  are  given  and  received.  The  terms  of  these 
contracts  involve  matters  of  fundamental  importance 
to  the  trades  concerned. 

The  sales  manager's  task  is  not  completed  when  dis- 
tributors are  selected  and  orders  taken,  for  in  many 
lines  it  is  not  the  first  sale,  but  the  repeat  sales,  which 
go  to  make  up  a  profitable  business.  Repeat  sales  are 
not  possible  unless  the  jobber  or  retailer  is  in  turn 
able  to  sell  the  goods.  In  proportion  to  the  rapidity 
of  his  sales  and  profits,  his  good  will  toward  the  manu- 
facturer increases  and  the  manufacturer  benefits  by 
increased  orders.  While  for  many  products  much 
greater  sale  could  be  secured  if  the  jobber  or  retailer 
would  single  them  out  for  emphasis,  the  jobber  or 
retailer  would  not  be  performing  his  function  if  he 
should  forget  the  fact  that  his  service  consists  mainly  of 
collecting  goods  from  many  manufacturers  making  them 
available  for  retailers  or  in  the  case  of  the  retailer,  collect- 
ing goods  from  jobbers  or  manufacturers  making  them 
available   in  small   amounts   for   consumers.     Never- 


hi       pk()Hli:ms  in  saij:s  managp:mknt 

tlicloss,  the  inaiiufacturer  of  identified  p;o()ds  finds  it 
|)()ssil)le  to  secure  the  interest  and  ^ood  will  of  dis- 
tributors throup;h  \ari()us  tyjx's  of  cooperation  which 
aid  the  retailer  in  his  l)usiness  as  a  whole  and  inci- 
dentally help  increase  the  sales  of  the  manufacturer's 
product.  Many  manufacturers  have  gone  to  great 
]en{>;th!^  in  assisting  their  dealers  to  become  more  compe- 
tent disti-ibutors.  There  are  no  standards  l)y  which  the 
sales  manager  can  select  the  methods  which  may  profit- 
ably be  used  in  cooperating  with  jobbers  and  retailers. 

The  resourcefulness  of  the  sales  executive  is  called 
for  in  meeting  the  competition  of  other  manufacturers 
of  the  same  type  of  goods,  in  advertising,  in  selection  of 
new  tactics  which  conform  to  best  business  ethics  and 
yet  which  obtain  the  results  of  increased  l)usiness  both 
immediate  and  future.  In  handling  cancelations, 
claims  and  complaints  sales  managers  will  find  that 
judicious  departures  from  general  policies  will  fre- 
quently operate  to  the  benefit  of  a  business. 

It  is  to  be  expected  that  numerous  and  difficult 
problems  fall  to  the  lot  of  the  sales  executive  in  con- 
nection with  the  management  of  a  sales  force,  since 
neither  upon  qualifications  nor  w^ork  of  the  salesman 
is  there  any  agreement.  The  problem  of  training  a 
sales  force  depends  largely  upon  the  type  of  salesmen 
selected  for  the  organization.  The  majority  of  business 
enterprises  sidestep  entirely  the  training  of  salesmen, 
either  by  hiring  only  experienced  salesmen  or  by  allow- 
ing salesmen  recruits  to  obtain  their  own  experience 
without  direction  or  responsibility  on  the  part  of  the 
executi\'e.  The  loss  brought  about  by  haphazard  and 
inadequate  training  has  led  to  the  development  of 
various  methods  of  training  ranging  from  occasional 
conferences  and  correspondence  courses  to  well-de- 
\'eloi)ed  resident  courses  supplemented  by  correspon- 
dence and  supervision.  Classes  for  the  training  of 
salesmen  have  been  developed  by  insurance  companies 
and  with  the  help  of  certain  educational  institutions 
it  is  probable  that  the  training  of  insurance  salesmen 
has  proceeded  to  a  point  beyond  that  reached  by  any 


THE  FIELD  OF  SALES  MANAGEMENT         17 

other  general  class.  The  great  variety  form  and  con- 
tent of  training  courses  is  based  upon  fundamental 
differences  of  opinion  and  upon  differences  in  complex- 
ity of  products. 

As  in  other  fields  of  economic  activity,  the  question 
of  compensation  of  sales  force  is  one  that  is  far  from 
settlement.  In  general,  there  are  two  basic  plans 
similar  to  time  and  piece  rates  for  factory  work. 
There  is  the  salary  plan  according  to  which  the  re- 
lation between  the  salesmen's  results  and  salary  is 
adjusted  only  over  long  periods,  and  the  commission 
plan  in  which  the  amount  of  compensation  depends 
directly  upon  the  amount  of  sales.  Popular  discussion 
today  leads  ordinarily  to  the  proposal  of  a  combination 
of  the  two  basic  plans,  sometimes  with  the  addition  of 
bonus  or  profit-sharing  features. 

In  the  supervision  of  sales  force  it  is  necessary  for 
the  sales  executive  to  adopt  methods  which  differ  from 
those  of  the  factory  executive.  Through  reports  and 
supervision  by  traveling  managers  it  is  possible  to 
overcome  to  a  limited  extent  the  difficulties  of  long- 
range  control  of  salesmen  in  the  field.  More  difficult 
is  the  task  of  securing  such  cooperation  and  activity 
on  the  part  of  the  sales  force  as  to  produce  the  desired 
results  in  terms  of  sales.  The  extent  to  which  successful 
selling  depends  upon  the  attitude  of  the  salesmen 
toward  the  house  and  toward  his  work  is  such  that 
frequently  extraordinary  means  such  as  contests,  con- 
ventions, must  be  used  in  order  to  stimulate  activity. 
These  are  in  part  a  substitute  for  personal  supervision. 

The  control  of  sales  operations  is  effected  by  means 
of  reports,  records,  and  control  officials.  Frequently  the 
difference  between  good  control  and  poor  control  is 
the  difference  between  good  records  and  poor  records. 
The  larger  the  business  the  less  possible  is  it  to  exercise 
adequate  control  of  sales  without  current  reports  from 
all  ranks  of  executives  as  well  as  occasional  reports  of 
outside  agencies  to  check  up  the  influence  of  personal 
factor  in  internal  records.  The  general  records  of 
importance  to  the  sales  department  may  be  classified  as : 


18  PKOHLEMS  L\  SALKS  MANAGEMENT 

(1)  Stilt  isticiil  records  roUitin^  to  customers,  pro- 
spective customers,  and  stiles  \'ariously  divided  ac- 
cording to  products,  territories,  classes  of  buyer. 

(2)  Records  of  performances  of  salesmen  and  other 
members  of  sales  force  according  to  individuals, 
districts,  and  so  forth. 

(3)  Records  concerning  advertising,  its  control  and 
results. 

(4)  Records  of  personnel  giN  ing  ratings,  application 
blanks,  interview  blanks,  individual  items  and  data, 
and  data  of  general  nature. 

With  this  information,  together  with  market  data  and 
the  records  obtained  from  accounts,  the  sales  manager 
may  direct  his  own  activities  properly  and  coordinate 
his  work  with  that  of  other  departments. 

While  it  is  evident  that  the  relation  between  selling 
and  financing  is  verj'^  close,  discussion  of  the  capital 
requirements  for  financing  sales  and  methods  of  han- 
dling credits  lies  properly  within  the  scope  of  corporation 
finance  and  credits  and  collections.  Nevertheless,  the 
sales  manager  must  never  lose  sight  of  the  fact  that 
his  actions  are  limited  bj^  and  predicated  upon  the 
financial  condition  of  the  enterprise,  just  as  he  will 
never  lose  sight  of  the  fact  that  the  financial  success  of 
his  business  dei)ends  largely  upon  the  success  of  the 
sales  department.  The  amount  of  capital  necessary  for 
financing  sales  depends  largely  upon  the  volume  of  sales 
and  the  length  of  the  period  between  the  receipt  of  goods 
by  the  sales  department  and  the  collection  or  payment 
after  sales.  The  common  sources  of  funds  for  financing 
sales  are  the  working  capital  of  the  enterprise,  bank 
loans,  and  loans  upon  the  collateral  furnished  by  cur- 
rent sales  such  as  acceptances,  notes,  or  book  accounts. 
Under  a  gi\'en  financial  condition  it  is  necessary  for 
the  credit  department  not  only  to  determine  the  terms 
under  which  a  specific  sale  will  be  financed,  but  also 
to  determine  whether  specific  applications  for  credit 
should  be  granted.  The  methods  of  handling  credits 
may  have  a  very  important  influence  upon  sales;  too 


THE  FIELD  OF  SALES  MANAGEMENT         19 

great  convservatism  may  cut  down  sales  and  cut  profits; 
likewise,  too  great  liberality  may  unduly  increase  the 
percentage  of  loss  from  bad  debts  The  financing  of 
sales  is  in  industries  producing  an  article  which  sells 
for  higher  price,  a  problem  of  importance.  Special 
corporations  have  formed  in  the  automotive  industry 
to  enable  manufacturers  and  dealers  to  grant  the  credit 
required  for  the  greatest  de\'elopment  of  sales.  In- 
stalment methods  and  consignment  methods  are  re- 
plete with  problems  for  the  concerns  which  demand 
their  use. 

Lastly,  because  repeat  sales  and  the  development  of 
consumer  and  dealer  good  will  frequently  depend  upon 
the  satisfaction  of  customers'  desires  with  reference  to 
delivery,  the  sales  department  is  vitally  interested 
in  the  way  orders  are  handled,  whether  it  has  control 
of  stockrooms,  packing  and  shipping  or  not.  Both 
in  the  case  of  goods  manufactured  to  order  and  goods 
manufactured  for  stock  the  necessity  for  careful 
planning  is  obvious.  There  seems  to  be  no  good  reason 
why  the  same  principles  of  stock  limits  should  not  be 
applied  to  finished  stock  for  the  purpose  of  both  cut- 
ting down  in\'entory  necessary  to  handle  orders  and  de- 
creasing the  loss  of  good  will  through  inability  to  fill 
orders  promptl}^  Requirement  for  quick  delivery  as 
a  selling  point  frequently  compels  the  sales  department 
to  establish  warehouses  at  strategic  points  and  in  other 
cities. 

Public  authority  influences  the  sales  executive  and 
the  distributive  operations  of  a  business  enterprise  at 
many  points.  Government  regulation  of  standards  of 
quality  and  quantity  as  in  pure  food  laws  and  laws  re- 
lating to  weights  and  measures;  taxation  as  related  to 
sales,  particularly  the  sales  tax  recently  the  subject  of 
wide  discussion;  foreign  corporation  laws  affecting  the 
right  to  do  business  in  other  states  than  in  the  one  of 
incorporation;  laws  and  judicial  decisions  concerning 
unfair  trade  practices  which  are  often  selling  practices 
— all  suggest  legal  and  economic  problems  in  the  solu- 
tion, of  which  the  sales  executive  has  a  vital  interest. 


20         rR()RlJ:MS  IN  SALES  MANAGEMENT 

The  broad-minded  modern  sales  executive  knows  that 
f'omplianco  with  jirosent  kiw  and  regulation  is  not  suffi- 
cient if  he  is  hiiihhiip;  for  the  future.  He  must  be  in 
the  vanguard  of  those  who  are  shaping  their  lousiness 
pohf'ies  and  practices  to  conform  to  the  demands  of 
enhglitened  iniliHc  opinion,  thus  anticipating  the  re- 
flection of  such  opinion  in  judicial  decision  and  statu- 
torv  enactment. 


PART  II 
SALES  ORGANIZATION 


PART  II 

SALES  ORGANIZATION 

OUTLINE 

A.  Location  of  Selling  Plant. 

1.  Central  sales  office. 

2.  Branch  and  district  offices. 

3.  Warehouses. 

B.  Selection  and  Construction  of  Selling  Plant  and 

Equipment. 

C.  Organization  of  Personnel.' 

1.  Type  of  organization. 

(a)  Line  organization. 

(b)  Functional  organizat  ion  of  sa  ies  department. 

(c)  Line-and-staff  organization. 

(d)  Committee  types  of  organization. 

(e)  Departmentalization   of   sales   oiganization 

according  to  product,  type  of  customer, 
or  other  non-functional  bases. 

2.  Shaping  the  sales  organization  to 

(a)  Size  and  financial  resources  of  concern. 

(b)  Methods  of  distril)uti()n. 

(c)  Character  and  volume  of  product. 

(d)  Type  of  buyer. 

(e)  Other  factors. 

.3.  The  chief  sales  executive. 

(a)   Qualifications  and  functions. 

4.  Minor  sales  executives. 

(a)  Types,  qualifications,  duties. 

(b)  Sources. 

5.  Salesmen. 

(a)  Qualifications  and  duties. 

(b)  Regular  salesmen  versus  special  types. 

6.  Credit  department  personnel. 

23 


•ji       i'i:()BIj:ms  ix  salios  management 

7.    Sclc'flilMl  of  SIlloS  pCMSOilllcl. 

(ji)   Basis  of  srlcclioii. 

(b)   Mctliods:      interview,    application     Maiiks, 
psyclioloirical  tests,  ete. 

1).       iili.Wt'll    OlFIC'K    OlKJAXIZATIOX. 

1.  InleriKil  organization. 

2.  lU'lation  to  main  office. 

1'].     'I'liK  Ai)\i;urisi.\(i   DKi'Airr.MKXT. 

1.  Relation  to  sales  depaitnient. 

2.  Relation  of  advertising  to  sales  manajier. 

3.  Sales   department,    advertising   department,   and 

advertising  agencies. 

Y.     The  Export  Department. 

1.  Relation  of  export  department  to  domestic  sales. 

2.  Location  of  export  department. 

3.  Relations  of  export  department  and  domestic  sales 

department  with  production  dej^artment. 

G.     Organization     for    Sales    Research     axd    Sales 
Planning. 

1.  Peisonnel  of  sales  research  oiganization. 

2.  Relation  of  sales  research  and  sales  planning  to 

sales,  advertising,  and  other  (U^partments. 

H.     Credit  Department. 

1.  Relation  to  sales  department. 

2.  Coordination  of  credit  and  sales  pohcies. 

I.       Relathjn  of    Sales    Departme.xt    to    Production 
Department. 

1.  Organization  foi-  cooidination  of  sales  and  produc- 
tion. 

J.      Relath)x  of  Sales  Department  to  Accounting  and 
Financial  Departments. 

K.     Rel.\tion  of  TiiAFFic  Department  to  Sales  Depart- 
ment. 


SALES  ORGANIZATION  25 

GENERAL  QUESTIONS* 

A.  Location  of  Selling  Plant. 

Where  shall  the  main  sales  offices  of  a  concern  ho  located? 

What  choice  of  location  is  offered?  What  are  the  ad- 
vantages and  disadvantages  of  each? 

When  decision  has  been  made  to  establish  branch  offices, 
where  should  they  be  located?  What  considerations 
should  determine  the  choice  of  location? 

Where  should  warehouses  be  located  if  separate  from 
branches?  Is  it  advisable  to  use  public  warehousing 
facilities,  lease  warehouse  buildings  or  portions  of  buildings, 
or  build  warehouse  facilities  particularly  for  the  use  of  the 
concern? 

B.  Selling  Plant  and  Equipment. 

What  type  of  building  is  required  for  performance  of  sales 
functions? 

What  tj'^pe  of  equipment  should  be  purchased? 

To  what  extent  is  the  purchase  of  equipment  within  the 
province  of  the  sales  manager? 

To  what  extent  should  matters  of  selling  plant  and 
equipment  be  left  to  officials  in  charge  of  office  manage- 
ment? 

C.  Organization  of  Personnel. 

Which  of  the  basic  forms  of  organization  should  be  cho*en 
for  the  sales  department? 

Which  form  of  organization,  line  and  staff  or  functional, 
possesses  the  greatest  advantages  for  the  selling  depart- 
ment of  a  particular  concern?  To  what  extent  can  the 
advantages  of  these  forms  be  secui'ed  in  a  small  enterprise? 

What  changes  are  required  to  remove  difficulties  in 
established  concerns  due  to  overlapping  of  authority  and 
incorrect  organization? 

Is  committee  organization  desirable?  Should  committees 
have  purely  advisory  or  mandatory  power? 

How  can  the  separation  of  planning  and  performance  be 
applied  in  building  sales  organizations? 

To  what  extent  does  this  require  the  utilization  of  officials 
whose  duties  are  devoted  solely  to  planning  and  research? 


2G  I'KoHLIvMS  IN  SALP]S  MANAGEMENT 

Should  the  sales  (lepjirtineut  subdivide  its  work  on  the 
basis  of  functions  sucii  as  advertising  management, 
slii])ping,  etc.; according  to  product,  so  that  minor  officials, 
salesmen,  and  advertising  are  grouped  according  to  the 
product  to  be  sold;  according  to  the  t3'i)cs  of  purchasers 
of  the  i)roduct,  so  that  separate  salesmen  and  managers 
are  to  l3e  used  for  large-contract  customers;  or  on  other 
bases? 

Given  a  product  and  method  of  disti'ibution,  how  can  a 
sales  organization  Ix'  shaped  to  fit  the  financial  resources 
of  the  company? 

Given  the  character  and  vcjlume  of  the  products  to  be 
sold  and  limited  financial  resources,  how  are  methods  of 
distribution  to  be  chosen  Avhich  will  permit  of  an  efficient 
sales  organization? 

What  organization  is  required  for  selling  through  whole- 
salers? 

What  are  the  organization  requirements  for  sale  direct  to 
retailers? 

What  organizations  are  required  for  the  following  types  of 
business? 

(1)  Mail  order  to  retailers  exclusively. 

(2)  Sale  of  product  through  selling  house  or  manufac- 
urer's  agent. 

(3)  Selling  through  jolibers  only,  either  using  mail 
methods  exclusively,  personal  salesmanship  and 
advertising,  or  combinations  of  the  two. 

(4)  Selling  both  to  joljbers  and  retailers  or  selling 
through  jobbers  exclusively  by  soliciting  orders  from 
retailers,  which  are  filled  through  jobbers. 

(5)  Selling  direct  to  retailers  generally,  but  to  jobbers 
in  some  districts. 

(6)  Selling  to  retailers  exclusively. 

(7)  Selling  through  l)ranch  houses  or  branch  stores 
direct  to  consumers,  together  with  sale  to  inde- 
pendent retailers. 

(8)  Sale  to  wholesale  consumers;  contract  selling. 

(9)  Sale  direct  to  consumers  at  retail. 

Wliat  should  be  the  qualifications  of  the  chief  sales 
executive?  Are  the  requirements  for  successful  executives 
in  other  lines  applicable  to  the  sales  manager  without 
modification? 


SALES  ORGANIZATION  27 

To  what  extent  docs  the  separation  of  planning  and 
performance  affect  the  qualifications  required  of  a  suc- 
cessful sales  executive?  To  whom  should  the  sales  mana- 
ger report?  What  should  ho  his  place  in  the  business 
organization? 

What  are  the  types  of  minor  sales  executives?  What 
should  be  their  qualifications?  Should  they  be  selected 
from  the  plant  or  from  outside  the  organization?  How 
should  they  l)e  chosen?  To  what  extent  should  the 
principle  of  foremaiishij)  be  applied  in  the  management  of 
salesmen?  Should  sales  supervisors,  squad  leaders  or 
field  men  be  employed  in  all  types  of  sales  organizations? 
What  should  be  the  duties  of  supervisors  of  salesmen? 
Should  salesmen  be  regarded  as  candidates  for  promo- 
tion through  minor  executive  positions  to  major  positions 
in  an  organization? 

What  are  the  types  of  salesmen?  Under  what  condition 
should  sales  organization  utilize  special  salesmen  for 
different  products?  When  is  it  advisable  to  use  junior 
salesmen  and  so-called  "missionary"  salesmen?  How 
should  salesmen  be  selected?  What  methods  of  selection 
are  most  satisfactory — interview,  application  blanks, 
psychological  tests,  etc.?  To  what  extent  will  careful  job 
analysis  assist  in  the  selection,  training  and  management 
of  salesmen  and  sales  executives? 

D.  Branch  Office  Organization. 

What  should  be  the  relation  of  the  branch  or  district 
office  to  sales  headquarters?  Should  the  branch  be 
practically  an  independent  organization  or  should  it  be 
subjected  to  close  and  detailed  supervision? 

How  should  branch  managers  be  selected? 

What  arrangements  should  ))e  made  at  the  branches  for 
controlling  credits,  handling  advertising,  carrying  stock, 
accounting  and  finance? 

E.  The  Advertising  Department. 

What  should  be  the  relation  of  the  advertising  department 
to  the  sales  department?  Should  the  advertising  depart- 
ment be  subordinate  to  the  sales  department? 

Who  should  pass  upon  advertising  appropriations;  upon 
plans  for  advertising  campaigns? 

What  should  be  the  relationship  of  the  advertising  depart- 
ment to  the  advertising  agency?     If  a  competent  adver- 


2s       ri{()i',Li:Ms  IN  sAiJ':s  maxachment 

tisinfi;  affciicy  is  ciiipldNtd,  i-  an  advcrtisiiifr;  dopiirtment 
necessary? 

F.  The  Export  Depautment. 

Since  the  export  department  deals  with  seUinn,  should  it 
not  be  coMibined  with  domestic  sales  uiidcf  the  headship 
of  the  chief  sales  executive? 

To  what  extent  should  the  export  department  1  )e sefj;regated 
from  tli(>  dom(>stic  sales  depai'tment? 

Should  the  location  of  the  export  department  be  deter- 
mined by  the  same  factors  as  the  location  of  the  domestic 
sales  (lepai'tment? 

What  organization  is  i-ecjuiicd  for  the  smooth  cooperation 
of  export  (lei)artment.  domestic  sales  department,  and 
production  department? 

G.  Organization  for  Sales  Research  and  Sales 

Planning. 

What  personnel  is  reciuired  for  sales  research? 

What  place  should  sales  research  and  planning  occupy 
with  reference  to  the  sales  department? 

When  and  to  what  extent  can  sales  research  and  market 
analysis  be  performed  l)y  the  advertising  agency  as  pait 
of  its  work  in  preparation  for  advertising  campaigns? 

H.     Credit  Department. 

Should  the  credit  department  1)e  a  part  of  the  sales 
department  or  should  control  of  credits  be  given  to  the 
financial  de])artm('nt  of  the  Imsiness  concern?  What  are 
the  arguments  for  each  plan?  What  organization  mea- 
sures help  to  coordinate  credit  management  and  sales? 
Should  the  credit  (lepai'tment  be  centralized  or  decentral- 
ized in  large  organizations  si'ljing  thi-ough  liranchcs? 

I.     Production  Department. 

What  should  l)e  the  relation  of  the  sales  department  to  the 
production  depaitmenl?  To  what  extent  can  organization 
provide  for  coordination  of  sales  and  production?  What 
are  the  advantages  and  disadvantages  of  committees 
created  for  the  jiurjiose? 

What  is  to  be  said  for  specialized  coordinating  officers? 


SALES  ORGANIZATION  29 

J.     Financial  Department. 

What  relationship  should  exist  between  the  sales  depart- 
ment and  the  accounting  and  finajicial  departments?  To 
what  extent  should  the  financial  department  hold  a  check 
over  the  sales  department? 

K.     Traffic  Department.     Packing  and  Shipping. 

What  should  be  the  position  of  the  traffic  department  with 
reference  to  the  sales  department?  Should  packing  and 
shipping  be  controlled  by  the  sales  department?  What 
means  should  be  adopted  to  secure  proper  coordination  of 
activities  if  packing  and  shipping  is  not  controlled  by  the 
sales  department?^ 

*The  literature  devoted  to  sales  organization  is  comparatively  meager. 
J.  G.  Frederick,  Modern  Sales  Management,  Chapters  I,  III,  IV  and 
XII;  A.  W.  Shaw,  Approach  to  Business  Prohlenis,  Chapters  III,  IV, 
VII  and  IX;  C'.  S.  Duncan,  Marketing:  Its  Problems  and  Methods, 
Chapter  19;  will  be  found  helpful. 

The  most  specific  printed  source  of  information  as  to  present  organi- 
zation practice  is  Modern  Sales  Organization,  comprising  a  summary  of 
practices  of  business  concerns  as  made  by  J.  C.  Aspley,  of  the  Dartnell 
Corporation.  John  G.  Jones,  Salesmanship  and  Sales  Management, 
Part  I,  Chapter  9  and  Part  III,  Chapters  I  and  II;  C.  W.  Hoyt,  Scien- 
tific Sales  Managemerd,  Chapters  I,  III  and  XVI  also  deal  witli  various 
aspects  of  the  sales  organization. 

The  following  take  up  sales  organization  incidentally  to  the  discus- 
sion of  general  business  organization:  Edward  D.  Jones,  Adminis- 
tration of  Industrial  Enterprises,  Chapters  III  and  VII;  D.  S.  Kimball, 
Principles  of  Industrial  Organization,  Chapter  W;  C.  B.  Going,  Prin- 
ciples of  Industrial  Engineering,  Chapter  III;  Hugo  Diemer,  Factory 
Organization  and  Administration,  Chapter  III.  H.  T.  Wright  gives  an 
interesting  viewpoint  based  on  English  practice  in  Organization  as 
Applied  to  Industrial  Problems,  Chapter  VIII  upon  "The  Co-ordinating 
Manager,"  Chapter  IX  upon  "The  Commercial  Manager,"  and  Chap- 
ter X  upon  "The  Sales  Department."  See  further  A.  H.  Church,  The 
Science  and  Practice  of  Management,  pages  28  and  111,  and  L.  C.  Mar- 
shall, Readings  in  Business  Administration,  articles  in  Printers'  Ink  and 
Sales  Management,  Sales  Manager  and  System. 


:{o       i'K()Hij:ms  IX  sAJ.Ks  mana(;i;mi-:xt 

I'UOHLEM    1 

Location  oi   Salks  IlKADgiAHTKus — Shoe 

M  AMFACTIHEUS* 

((/)  The  N'iciorv  Shoe  ( '()iiij)aiiy,  incorporated  in 
1907  as  suc'cessor.s  to  a  siiiallor  eonipany,  has  two 
factories  located  in  Brockton,  Massachusetts.  The 
capacity  of  these  plants  is  about  8,500  pairs  per  day  of 
men's  and  women's  (Joodyear  welt  and  McKay  shoes. 

Up  to  1911  the  sales  offices  were  located  at  the  plant. 
At  that  time  a  location  was  secured  in  the  wholesale 
shoe  district  of  Boston,  20  miles  away,  and  the 
selling  offices  were  mo\'ed  to  the  market  center.  Offi- 
cials believed  that  there  would  be  a  sufficient  advantage 
in  location,  through  the  possibility  of  contact  with 
visiting  buyers  and  with  other  members  of  the  trade, 
to  offset  the  very  considerable  expense  of  maintaining 
offices  in  a  high-rent  district. 

The  company  distributes  its  product  through  its  own 
stores  located  in  the  larger  cities  of  the  United  States 
and  in  the  smaller  places  through  exclusive  agencies. 
It  employs  national  ad\'ertising  on  an  extensive  scale. 
Some  emphasis  is  laid  upon  mail-order  business.  Its 
entire  product,  with  some  turned  shoes  purchased  to 
round  out  the  line,  is  taken  by  its  own  stores  and 
selected  distributors,  the  latter  taking  50%  of  the 
output.  As  a  means  of  cutting  down  expense  to 
meet  the  needs  of  a  period  of  depression  and  falling 
prices,  late  in  1920,  the  company  seriously  considered 
the  removal  of  its  sales  offices  to  the  plant,  where 
sufficient  room  was  available. 

Question 
Should  the  company  have  moved  the  offices  to  the 
plant? 


*Upon  location  a.s  applied  particularly  to  manufacturing  plants,  see 
chapters  in  general  works  mentioned  above,  also  Shaw,  Approach  to 
Business  Problems,  Chapters  III,  IX. 


SALES  ORGANIZATION  31 

(6)  The  James  P.  Alden  Coinpany,  likewise  located 
in  a  suburb  of  Brockton,  sells  a  widel}'  advertised, 
trade-marked  shoe  through  exclusive  agencies  located 
in  all  parts  of  the  United  States  and  through  70 
stores  in  which  it  holds  stock  indirectly  through  a  hold- 
ing company  subsidiary  to  the  manufacturing  cor- 
poration. Its  capacity  is  24,000  pairs  i^er  day,  and 
annual  sales  over  $25,000,000.  Its  production  com- 
prises only  the  trade-marked  lines. 

The  company's  main  sales  ofhces  are  located  at  the 
plant.  In  the  falling  market  the  question  came  up  as 
to  the  advisabilitj^  of  locating  offices  in  Boston.  It 
was  argued  that,  with  the  large  production  and  the 
necessity  of  having  an  extensive  list  of  customers,  bene- 
fits would  be  derived  from  a  Boston  location. 

Question 
Should  the  location  of  sales  offices  at  the  plant  have 
been  continued? 


(c)  The  H.  V.  Hammond  Company,  located  in 
another  suburl)  of  the  shoe-manufacturing  city,  has  a 
capacity  of  10,000  pairs  per  day.  Its  main  sales  office 
is  located  at  the  plant,  while  it  maintains  a  sample  room 
in  Boston.  Shoes  are  sold  through  the  regular  chan- 
nels—some of  them  through  wholesalers,  but  most  of 
them  to  retailers. 

Question 
If  the  sample  room  is  in  charge  of  a  competent  repre- 
sentative of  the  sales  organization,  is  there  any  reason 
for  location  of  the  sales  office  in  Boston? 


32  I'K()HLi:.MS   IN   SAI.IIS  MAXACiOMKNT 

l*IU)HLi:.M    "^ 

Location  ok  Salks  IIiOADCiUAUTEHs 

(  J  A  iniKNT    MAXiriACTUREUS 

Tlic  ^\'hit('  ('()m|);iiiy  of  ( 'l('\cl;ni<l.  manufacturing 
woiiicirs  and  misses'  suits  and  cloaks  of  modium  and 
lii<!;li('r  tirades,  soils  its  product  mainly  west  of  the  Ohio 
Ki\('i-.  \c\v  ^'ol•k  location  offers  no  j)ai'ticular  advan- 
tajic  in  huyinji;  falnics,  because  the  hu3'crs  of  the  firm 
attend  the  ()peninj2;s  of  the  woolen  trade  in  P\^bruary 
and  midsununei-.  The  company,  further,  receives 
style  s(n-vice  from  \arious  sources  and  feels  that  it  can 
keep  in  touch  with  styles  without  the  aid  of  a  New  York 
office.  On  the  other  hand,  there  is  notable  concentra- 
tion of  the  suit  and  cloak  manufacturing];  industry  in 
New  York,  which  is  known  as  the  style  center  for  the 
United  States.  The  cost  of  a  branch  office  would  be  at 
least  $10,000  })er  year;  to  maintain  the  entire  sales 
organization  in  New  York  would  involve  considerably 
larger  expense.  » 

Questions 

1.  Should  the  company  establish  sales  headquarters 
or  at  least  a  branch  office  in  New  York? 

2.  If  so,  is  the  advantage  of  a  Fifth  Avenue  location 
sufficient  to  warrant  the  extra  expense? 


Problem  3 
Location  of  Branch  Offices 

(a)  In  August,  1920,  the  J.  V.  Hatch  Company  was 
organized  to  take  over  the  Francke  Pipe  and  Valve 
Company,  which  was  then  in  the  hands  of  a  receiver. 
The  Francke  Company  had  conducted  a  manufacturing 
business  and  pipes,  pipe  fittings,  and  valves,  with  fac- 
tories in  a  Rhode  Island  city  and  Chicago.     The  com- 


SALES  ORGANIZATION  33 

pany  had  attained  a  national  distribution,  but  through 
losses  in  inventory  in  the  depression  of  1920,  and  a  sud- 
den and  acute  loss  of  sales,  bankruptcy  had  resulted. 
The  management  of  the  Hatch  Company,  in  survey- 
ing the  situation,  decided  that  a  reorganization  of  the 
distributive  sj^stem  was  necessary.  Among  other 
things  the  matter  of  location  of  branches  and  the  num- 
ber necessary  to  furnish  satisfactory  marketing  facil- 
ities were  considered.  R.  N.  Smith,  the  vice-president 
in  charge  of  sales,  maintained  that  five  branches, 
strategically  located,  were  sufficient  for  national  dis- 
tribution. 

Questions 

1.  Was  he  right  in  this  contention? 

2.  Where  should  the  branches  have  been  located? 


(b)  The  B.  M.  Swett  Company,  located  in  a  manu- 
facturing city  of  New  England,  is  a  large  producer  of 
woodworking  machinery,  such  as  timber  sizers,  planers, 
surfacers,  molders,  automatic  knife  gi-inders,  trim  saws, 
etc.  The  machines  range  in  price  from  $1,000  to  $9,500 
each,  vary  in  weight  from  2,000  lbs.  to  30,000  lbs.,  and 
are  sold  direct  to  saw  mills,  planing  mills,  furniture 
factories,  and  other  manufacturers  of  wood  products. 

Prior  to  1916  the  output  of  the  factory  was  disposed 
of  through  agency  agreements  with  machinery  dealers 
in  various  cities  of  the  United  States.  At  that  time  the 
management  considered  the  advisability  of  attempting 
to  secure  a  greater  degree  of  control  of  sales  and  more 
aggressive  selling  by  establishing  branch  offices.  The 
company  had  sufficient  capital  to  finance  such  an 
undertaking.  An  alternative  was  proposed  of  control- 
ling a  sales  force  from  the  New  England  office  without 
setting  up  branch  offices. 


•M  l'hM)RIJ;MS  I\  SALKS  MANAGEMENT 

Queslio7}s 

1.  Would  it  hiivc  Ix'cii  advisable  for   the   manage- 
ment to  establish  brancii  oflicos? 

2.  If  so,  where  should  they  have  been  located? 

3.  What  should  have   been    tlic   oider  of  establish- 
ment? 


(c)  The  Black  Furniture  Company  plant  is  in  a  small 
town  near  Michigan's  lumber  section,  originally  so 
located  because  of  the  nearness  of  raw  material.  The 
company  for  20  years  manufactured  the  cheaper 
grades  of  furniture,  selling  entirely  through  agents,  one 
located  in  New  York,  and  the  other  in  Cirand  Rapids. 
Later,  through  its  success  in  securing  designers,  it 
began  to  acquire  a  reputation  for  good  styles.  New 
lines  were  added  and  the  cheaper  grades  ultimately 
thrown  out,  manufacture  being  confined  to  higher  grades 
in  period  styles.  In  1915  the  company  wished  to  take 
over  the  sale  of  its  product  and  to  establish  its  own  sales 
organization  to  sell  to  retailers,  with  such  offices  as 
should  be  necessary.  The  management  was  finally  able 
to  limit  consideration  of  the  location  problem  to  two 
solutions : 

(1)  The  location  of  the  main  sales  office  at  the  plant, 
with  sample  and  branch  ofhces  at  Grand  Rapids  and 
New  York  City. 

(2)  Location  of  the  main  sales  office  at  Grand  Rapids 
with  a  branch  in  New  York  City. 

Question 
Which  location  should  be  adopted? 


SALES  ORGANIZATION  35 

{d)  The  Zetter  Metal  Products  Company  manufac- 
ture steel  office  furniture,  as  well  as  metal  lathe  and 
concrete  reinforcement  material.  The  company  is  of 
comparatively  recent  origin,  having  been  incorporated 
in  1916.  It  has,  however,  experienced  a  very  rapid 
growth  and  the  management  in  the  first  few  years  was 
continually  faced  with  the  problem  of  selecting  new 
locations  for  branch  offices.  Sales  were  made  through 
the  branch  ofhces  to  consumers  or  direct  to  retailers. 
It  has  been  the  policy  to  establish  a  branch  office  when- 
ever it  has  been  thought  that  within  a  reasonable  length 
of  time  it  would  show  a  profit.  In  1917  the  sales  man- 
ager undertook  a  study  of  the  locations  in  which  he 
should  place  his  branch  offices  with  a  growth  of  business. 

Question 
What  locations  should  he  have  chosen? 


Problem  4 
Location  of  Branches — Machinery  Manufacturer 

The  Electric  Crane  Company,  manufacturing  electric 
overhead  traveling  cranes,  electric  hoists,  electric  ship 
winches  and  accessories,  has  a  plant  located  in  central 
New  York.  Sales  headquarters  are  located  at  the 
plant.  The  company  has  five  branch  offices  at  New 
York  City,  Philadelphia,  Pittsburgh,  Chicago,  and  San 
Francisco  owned  and  controlled  by  the  company  and 
nine  agents  selling  on  a  commission  basis  in  other  cities. 
The  sales  are  made  direct  to  user;  and,  since  each  sale 
is  in  part  an  engineering  proposition,  it  is  necessary  to 
work  up  each  contract  over  a  considerable  period  of 
time  by  conferences  with  the  engineering  departments 
of  customer  concerns.  The  salesmen  are  without  ex- 
ception men  of  engineering  training  and  experience. 

The  branch  offices  have  proved  very  satisfactory  in 
the  experience  of  the  company  and  it  is  contemplating 
adding  three  new  ones  in  the  very  near  future  as  part 


3(i  TKOIUJIMS  IN  SALMS  MANAGEMENT 

of   the   phin  of   liaving  hranches   in   all   of   the   most 
important  centers  of  the  country. 

1.  Where  should  the  new  branch  (jflices  be  located? 

2.  What  considerations  should  determine  the  order 
of  their  establishment? 


Problem  5 
Location  of  Warehouses 

The  Lever  Brothers  Company  manufactures  a  line  of 
soap  and  soap  specialties,  its  product  being  nationally 
advertised-  and  having  a  very  large  distribution,  par- 
ticularly among  grocers.  The  company  distributes 
through  jobbers,  maintaining,  however,  a  large  force  of 
salesmen  to  solicit  business  through  retailers,  orders 
secured  being  turned  over  to  the  jobbers  for  filling.  It 
is  estimated  that  this  company,  for  certain  of  its  soap 
products,  reaches  over  80%  of  the  grocers  of  the  United 
States  and  a  large  proportion  of  drug  stores  and  depart- 
ment stores. 

The  Procter  &  Gamble  Company,  a  competing  con- 
cern, has  recently  undertaken  to  distribute  direct  to 
retailers,  discontinuing  its  dependence  upon  jobbers. 
The  company  has  likewise  achieved  intensive  distribu- 
tion of  its  product  among  grocers  on  the  basis  of  long- 
continued  advertising  in  national  and  local  media  and 
by  a  long  period  of  personal  solicitation  through  its 
sales  force  cooperating  with  jobbers. 

In  order  to  supply  the  trade,  both  concerns  have 
found  it  necessary  to  establish  warehouses  or  engage 
warehouse  facilities  in  various  cities. 


SALES  ORGANIZATION  37 

Questions 

1 .  What  should  be  the  number  and  location  of  ware- 
houses for  Lever  Brothers,  in  order  to  satisfactorily 
serve  the  jobbing  trade? 

2.  How  would  the  number  and  location  of  ware- 
houses be  changed  to  fit  the  needs  of  Procter  &  Gamble 
in  distributing  direct  to  retailers? 


Problem  6 
Sales  Organization — Conflicting  Authority 

The  Currier  Rubber  Company's  organization  is  in 
general  of  the  military  type,  authority  passing  directly 
from  the  president  to  the  workmen  at  the  benches. 
Because  of  personal  interests  and  preferences,  there  is 
no  clearly  defined  concentration  of  authority,  each 
officer  lending  his  hand  in  almost  any  line  when 
emergency  arises.  The  sales  manager  of  the  factory  or 
New  England  sales  branch  handles  all  the  stock  issues 
of  the  company  and  performs  all  duties  connected  with 
the  development  of  new  products. 

The  board  of  directors  consists  of  the  president  of 
the  company,  who  acts  as  both  general  manager  and 
manager  of  distribution,  the  treasurer  who  is  also 
first  vice-president  and  factory  manager,  the  second 
vice-president  who  is  manager  of  tires  and  advertising, 
the  manager  of  the  Chicago  office,  and  two  other  men 
not  directly  connected  with  the  company;  the  secre- 
tary acts  as  paymaster  and  reports  directly  to  the 
president.  One  man  acts  as  office  manager,  account- 
ing manager,  and  statistical  manager;  another  man 
acts  as  attorney;  another  as  manager  of  shipping  and 
stores;  a  fourth,  who  is  manager  of  credits,  reports 


.ss 


ri!()i'.ij:Ms  IN  s.\Li:s  maxaciimiint 


directly  to  the  president,  us  do  tlie  others.  The  inaii- 
•d^vr^  of  tile  New  York,  Chicago  and  New  England 
districts  report  directly  to  the  ])resident,  acting  in  the 
capacity  of  managers  of  distriluition.  If  one  bears  in 
mind  that  in  several  cases  one  man  occupies  two  or 
more  t)f  the  positions  indicated,  the  following  chart  will 
illustrate  the  present  organization. 


STOCKHOLDERS 

1         


BOARD  OK  DIRECTORS 
,  I  , 


PRESIDENT 


TREASURER  |    |     2ND  VICEPRES.     ]       |       1ST  VICEPRES      ]     |  SECRETARY         | 


GENERAL  MANAGER 
I 


Manager 

Tirr  Sales 

&  Productioi 


ManagCT 
Employment 

Supl. 
trupMtioQ 

1 

Sup't . 
Receiving 

Mannccf 
Nfw  York 
Branch 

Manager 
Chic.njo 
Branch 

New  England 
Branch         | 

Question 
Draw  up  a  plan  for  an  ideal  organization  for  this 
concern,  which  may  be  used  as  a  basis  for  developing 
the  present  organization  as  changes  take  place  from 
time  to  time. 


SALES  ORGANIZATION  39 

Problem  7 
Line-and-Staff  Organization 

Although  mihtary  or  line  organization  insures  clear 
demarcation  of  authority,  the  many  decisions  to  be 
made  in  large  organizations  upon  matters  of  sale,  pro- 
duction and  finance  demonstrate  the  desirability  of 
securing  some  of  the  ad\'antages  of  functional  special- 
ization without  the  possible  confusion  of  authority. 
Many  firms  have,  therefore,  adopted  a  combination 
usually  called  ''line-and-staff."  Among  these  is  the 
Stetson  concern,  manufacturing  pipe  fittings  and 
valves.  Authority  is  transmitted  directly  from  the 
president  to  the  following  officers:  vice-president  in 
charge  of  engineering,  purchasing  agent,  comptroller, 
vice-president  in  charge  of  production,  employment 
manager,  vice-president  in  charge  of  sales,  treasurer, 
and  traffic  manager.  The  president  is  assisted  by  the 
executive  committee,  consisting  of  the  comptroller, 
vice-president  in  charge  of  sales,  and  staff  assistant 
or  chief  of  staff;  also  by  the  staff  consisting  of  an  or- 
ganization expert,  the  executive  assistant  to  the  presi- 
dent, and  the  staff  assistant  mentioned  above. 

The  ideal  staff  features  in  any  large  industrial  or- 
ganization are  said  to  include  a  chief  of  staff,  who 
should  be  broadly  educated  and  expert  in  management 
and  whose  duties  should  be  to  direct  research  and  con- 
ferences between  staff  and  line.  In  addition,  there 
should  be  as  members  of  the  staff,  first,  one  versed  in 
accounting,  business  statistics,  records,  and  cost  sys- 
tems; another,  an  engineer  in  charge  of  testing 
materials;  a  third,  capable  of  giving  advice  relative  to 
buildings,  equipment,  and  production  methods;  a 
fourth,  able  to  handle  labor  relations. 

Questions 

1.  Is  the  staff  of  the  Stetson  Company  complete? 

2.  Under  what  conditions  can  such  a  staff  fulfil  the 
functions  of  an  ideal  staff? 

3.  Is  any  staff  complete  without  a  member  com- 
petent to  give  advice  as  to  distribution  problems? 


10         PROBLEMS  IN  SALES  MANAGEMENT 


ORGANIZATION   CHART 
THE  RONALD  CALCULATING  MACHINE  CO. 


PRESIDENT 


Auistant  Sairt  Manager 


Forcicn  Sain  Manager 


Pacific  State  Div.  M'i'i 


Central  Divition  M  g  i 


New  England  Div    M'g'i 


Eaitern  Division  Mgr. 


VicePrcs.    Charge  of  Soles —]     Ass't. Secretary-   Office  M'g'r.    -    Vice  Pres.  Charge  of  M'f'g. 


Shipping  and  Receiving 


Mailing  Department 


Advertising  &  As'st    Sales  Mg'r 


Systems  Service 
Department 


Traffic  Manager 
IDomestic  h  Foreign 


Stock    Maintonlan 


I         Stockkeeper         | 


Su^t.  of  lnvcnti( 


Experimental  Dep't 


Enginering  Dep't. 


/JTool  Designl 


■]      Drafting 


^itor  in  Chief 
Co.  Publication 


Sales  Servic 
Manager 


Machine  Records 
fc  Schedules 


Testing  & 
Packing 


Punting    and   Mailir 


Advertising  k 
Supply  Stock 


Sates  Servic 
Corresponde 


SALES  ORGANIZATION  41 

Problem  8 

Changing  Line  to  Line-and-Staff  Organizations 

The  chart  on  page  40  illustrates  the  line  organization 
of  the  Ronald  Adding  Machine  Company,  which 
manufactures  adding  and  calculating  machines  and 
distributes  them  throughout  the  United  States. 

Questions 

1.  What  changes  would  be  necessary  in  the  organi- 
zation in  order  to  make  it  a  line-and-staff  organization? 

2.  What  would  be  the  advantages  of  a  change  from 
the  viewpoint  of  management  of  sales? 


Problem  9 
Functional  Organization*   . 

The  general  manager  of  a  large  rubber  manufacturing 
concern  located  in  Akron  is  an  enthusiastic  advocate  of 
functional  organization.  The  organization  of  his  firm 
is  illustrated  by  the  diagram  on  page  42. 

In  preparing  the  organization  manual,  the  duties  and 
authority  of  the  principal  members  of  the  department 
were  outlined.  The  following  are  examples  as  applied 
to  the  manager  of  distribution  and  one  of  the  sub- 
ordinate executives: 

General  Scope  of  Duties  of  Manager  of  Distribution 

(a)  He  is  to  have  entire  charge  of  personnel  in  branches 
operating  under  the  management  head. 

(6)  He  is  to  have  responsibihty  for  control  of  expenses  of 
operation  of  branches. 

(c)  He  is  to  carry  out  the  sales  policies  of  the  Manager  of 
Distribution. 

*In  addition  to  the  general  works  mentioned  above,  see  F.  W.  Taylor, 
Shop  Management,  pp.  95-107. 


42 


PKOHLKMS  IX  SALES  MANAGEMENT 


(d)  He  is  to  see  that  the  written  accounting  systems  of 
the  Manager  of  Accountinp;  arc  carried  out  in  the  branches. 

(e)  Same  for  crcilit . 

(/)   He  is  to  carry  out  the  inerciiaiidising  policies  as  issued 
from  time  to  time  by  the  Manager  of  Footwear  Merchandise. 


BOARD  OF  DIRECTORS 


PRESIDENT 


r 


Manager  Finances 


_C 


Manager  Taxation 


Manager  Purchasing 


1. 


Manager  Credits 


Manager  Accounts 


ZL 


Manager  Office 


MANAGER  OF  DISTRIBUTION 


j: 


Manager  Tire  Sales 


r 


Manager  Merchandise 


_C 


Manager  Advertising 


3. 


Mgr.  Footwear  Business 


J_ 


Mgr.  Footwear  Jobbers 


Manager  Export 


Manager  Sales  Information 


Duties  of  Manager  of  Sales  Promotion 
(Reports  to  Manager  Tire  Sales) 

(a)  He  has  direction  of  branch  salesmen's  work,  subdi- 
vided into: 

(1)  Securing  and  handling  of  salesmen's  reports  and 
weekly  letters. 

(2)  Issue   to   salesmen  and  branch  managers  series  of 
bulletins  regarding  details  of  sales  work. 

(3)  Compilation  of  the  sales  manual. 


SALES  ORGANIZATION  43 

(b)  He  is  to  keep  in  touch  withi  the  advertising  campaigns 
and  policies  of  the  company  and  interpret  the  same  to  the 
sales  force. 

(c)  He  is  to  cooperate  with  the  statistical  department 
and  from  the  statistical  department  derive  figures  on  which 
to  base  territorial  analyses. 

(d)  He  is  to  keep  records  of  each  salesman's  efforts. 

(e)  He  is  to  lay  plans  for  sales  campaigns  in  order  to 
realize  quotas  set  by  the  statistical  department. 

(/)  He  is  to  organize  a  system  of  sales  promotion  in 
connection  with  inquiries  received  from  advertising  media. 

(g)  He  is  to  delegate  to  an  assistant  the  duty  of  the  details 
involving  the  interpretation  of  policies  and  statistics  to 
the  sales  force  so  as  to  keep  branch  sales  forces  properly 
informed  at  all  times  as  to  objective  desired  and  results 
accomplished. 

Question 
Prepare  a  set  of  instructions  for  the  manager  of  tire 
sales,  the  manager  of  tire  branches,  the  manager  of  tire 
jobbers,  who  reports  to  the  manager  of  tire  sales,  and 
the  manager  of  advertising. 


Problem  10 
Functional  Organization — Contact  with  Customers 

The  sales  manager  of  a  large  clothing  manufacturer 
selling  direct  to  retailers,  whose  sales  amount  to  some 
five  million  dollars  per  year,  found  that  his  gross  sales 
had  been  stationary  for  several  years.  More  salesmen 
were  hired,  territories  were  cut  down,-  and  advertising 
was  increased  without  material  results.  Further  anal- 
ysis of  sales  data  showed  that  the  sales  per  customer 
were  small,  that  the  changes  in  the  list  of  small  cus- 
tomers were  numerous,  and  among  large  customers  few. 
The  conclusion  was  drawn  that  there  was  discrimina- 


41  PROBLEMS  IX  SALKS  MANAGEMENT 

tion  luiiong  lurgp  and  small  customers,  although 
sak'siiuMi  wore  continually  ordered  not  to  favor  large 
customers.  While  close  examination  revealed  no  glar- 
ing dis(!ourtesy  to  small  customers,  it  was  found  that 
members  of  the  sales  de])artnient  were  much  better 
acquainted  with  the  larger  customers  and  that  much 
more  satisfactory  letters  were  written  to  them.  The 
sales  manager  felt  that  the  fault  was  not  that  of  any 
individual,  but  lay  in  the  organization  itself.  His 
internal  organization  was  largely  functional;  the  credit 
man  and  a  few  correspondents  (his  assistants)  took  care 
of  all  credit  problems  and  handled  all  correspondence 
as  to  credits.  Another  department  head,  with  his 
assistants,  took  care  of  all  complaints  whether  referring 
to  goods,  prices,  shipments,  returns  or  other  matters. 
Still  another  department  handled  all  correspondence 
relating  to  sales  promotion. 

The  sales  manager  has  great  confidence  in  functional 
organization,  but  he  is  impressed  with  the  fear  that  it 
tends  to  cause  lack  of  contact  between  house  and  cus- 
tomers. 

Question 
Is  it  possible  to  offset  this  disadvantage  by  a  modi- 
fication of  the  present  organization? 


Problem  11 
Committee  Organization 

The  Hammett  Company  manufactures  an  extensive 
line  of  paper  products,  including  labels,  tags,  tissue 
papers,  jewelry  boxes,  paper  articles  for  holiday  trade, 
etc.  The  board  of  directors  consists  of  six  men,  one  of 
whom  is  in  charge  of  purchasing;  the  second  in  charge 
of  manufacturing,  warehousing,  shipping,  finance, 
accounting,  and  office;  the  third  in  charge  of  the 
retail  stores  maintained  by  the  company  in  five  of  the 
larger  cities;  the  fourth  in  charge  of  merchandising; 


SALES  ORGANIZATION  45  . 

the  fifth  in  charge  of  selling  personnel;  and  the  sixth  in 
charge  of  foreign  sales. 

Extensive  use- is  made  of  a  system  of  advisory  com- 
mittees which  are  not  themselves  executive  bodies,  but 
are  in  all  cases  advisory  to  some  executive.  The  work 
that  the  committees  undertake  is  of  various  types,  but 
in  general,  wherever  the  development  of  plans  and 
policies  calls  for  full  presentation  and  understanding  of 
the  interests  of  two  or  more  separate  administrative 
units  of  the  business — for  instance,  production  and 
sales,  production  and  foreign  sales,  domestic  sales  and 
foreign  sales,  or  the  like — wherever  coordination  is  the 
principal  problem,  committees  are  used  and  the  man- 
agement claims  that  they  fill  a  place  that  cannot  be 
filled  by  any  other  device  of  management. 

Relating  to  sales  work  there  are  several  types  of 
committee : 

1.  The  subordinate  merchandise  committees. 

2.  The  chief  merchandise  committee. 

3.  The  advertising  committee. 

4.  The  sales  committee. 

The  subordinate  merchandise  committees  are  five  in 
number,  divided  and  named  according  to  the  sales 
departmentalization  of  the  product  of  the  company; 
e.  g.,  the  holiday  trade  committee,  the  jewelry  trade 
committee,  and  others.  The  chairman  of  a  committee 
is  the  merchandise  manager  for  that  department;  the 
man  whose  duty  in  the  sales  work  is  to  stimulate  the 
sale  of  products  placed  in  his  department.  Other  mem- 
bers of  these  committees  are  taken  from  the  sales  force 
and  from  the  production  departments.  Each  com- 
mittee acts  in  an  advisory  capacity  to  the  chief  mer- 
chandise committee  on  such  matters  as  regards  means 
of  improving  the  product,  packaging,  and  stimulation 
of  sales. 

The  chief  merchandise  committee  consists  of  the  five 
merchandise  managers,  those  who  act  as  chairmen  of 
the  subordinate  committees.  This  committee  passes 
on  all  recommendations  of  the  subordinate  merchandise 


4()  PnoiU.llMS  IX  SALES  MANAGEMENT 

coininittees.     Bricflx   tlic  fuiiclioiis  of  the  merchandise 
managers  ;in<l  of  tliis  coinniittcc  ar(>  as  follows: 

Direction  of  sales  by  lines. 

Instruction  of  salesmen  in  selling. 

Develoi)nient  of  merchandise. 

Control  of  schedules  for  making  and  introducing  new 

merchandise. 

Passing  on  all  questions  relating  to  change  of  labels, 

goods,  or  })ut-up. 

Dropping  of  old  merchandise,  or  disposing  of  dropped 

goods. 

Reconnnendation  of  selling  prices  to  the  estimating 
department,  whose  schedules,  in  turn,  must  be 
approved  by  three  directors. 

The  advertising  conunittee,  which  consists  of  the  ad- 
vertising manager,  one  territorial  sales  manager,  the 
chief  sales  correspondent,  and  the  assistant  manager  in 
charge  of  dealers'  and  consumers'  service  work,  origi- 
nates advertising  ])lans,  and  passes  on  the  recommen- 
dations of  merchandise  managers  as  to  advertising. 

The  sales  committee  is  an  unofficial  body  consisting 
of  the  territorial  sales  managers,  the  advertising  man- 
ager, the  president,  and  the  director  of  finances  and 
manufacturing,  which  outlines  the  major  policies  of 
selling  to  be  passed  upon  by  the  board  of  directors. 

Supervision  of  the  sales  force  and  the  total  sales,  as 
contrasted  with  sales  by  departments,  rests  with  the 
director  of  selling  personnel,  who  has  two  assistants  or 
territorial  sales  managers  aiding  him.  The  director  also 
acts  as  a  territorial  sales  manager.  A  list  of  the  func- 
tions of  the  territorial  sales  managers  follows: 

Management  of  district  managers  and  salesmen. 
Jurisdiction  of  total  sales  (sales  by  departmental 
lines  to  be  accounted  for  by  merchandise  managers). 
Passing  u])on  questions  of  policy  afTecting  relations 
with  customers.  (New  policies  or  interpretation  of 
difficult  cases  rest  with  a  committee  of  directors). 


SALES  ORGANIZATION  47 

Direction  of  sales  correspondence  as  recommended  by 
subcommittees  on  sales  correspondence. 
Promotion  of  new  methods  of  selling. 

Question 
Would  it  be  advisable  to  change  the  status  of  the 
committees  so  that  instead  of  being  merely  advisory, 
their  decisions  should  be  mandatory? 


Problem  12 
Committee  Type  of  Organization 

The  Rand  Soap  Company,  of  Philadelphia,  produces 
soap  products  and  distributes  these  nationally  under 
well-known  brands.  Prior  to  January,  1920,  the  sales 
organization  was  as  follows: 

A  vice-president  in  charge  of  sales  had  full  authority 
over  all  sales  work.  Under  him  were  the  following 
assistants:  (1)  the  assistant  sales  manager  in  charge  of 
personnel,  under  whom  were  branch  managers,  (2)  the 
export  sales  manager,  (3)  sales-promotion  manager,  who 
handled  dealer  helps  and  secured  new  dealers  (4)  two 
merchandise  managers  whose  duty  it  was  to  stimulate 
the  sales  of  different  products  put  under  their  jurisdic- 
tion, (5)  the  statistician.  Branch  managers  located  in 
seven  cities  in  the  United  States  were  given  control  of 
the  salesmen.  The  sales  department  had  no  well- 
worked-out  plan  of  cooperating  with  the  production 
department  to  secure  coordination  of  sales  and  pro- 
duction. Further,  it  was  the  opinion  of  the  vice-presi- 
dent in  charge  of  sales  that  there  was  a  lack  of  coopera- 
tion between  the  various  members  of  the  sales  staff. 
After  a  study  of  sales  organizations  he  came  to  the 


48         PKoiiLKMS  IN  SALES  MANAGEMENT 

coiu'lusion  tliat  the  coinmittoe  system  would  help  to 
solve  the  (liHiculties  wliich  the  conipjiny  was  experi- 
encing, lie  recommended  to  the  Board  of  Directors 
that  such  a  system  be  adopted,  and  presented  the  fol- 
lowiuf^;  i)lans  used  by  other  manufacturers  as  being 
adaptal)le  to  the  Rand  organization: 

(1)  Tho  Miller  Company,  located  in  Bridf2;cport,  Connecti- 
cut, manufactures  a  large  line  of  machine  tools,  pijjc  tools, 
and  small  tools  used  in  wood  and  metal  working  trades. 
Their  sales  organization  is  of  the  committee  type,  the  direc- 
tion of  sales  being  divided  between  three  sales  managers,  each 
one  is  charge  of  a  particular  line  of  products,  and  the  sales 
promotion  manager.  These  four  managers  act  as  a  com- 
mittee in  the  management  of  district  sales  managers,  and 
through  tiiem  the  salesmen,  while  the  general  sujDerintendent 
of  production,  the  merchandise  manager,  the  export  sales 
manager  and  the  sales-promotion  manager  make  up  what  is 
called  the  "planning  board,"  the  members  of  which  are 
under  the  control  of  the  vice-president  and  general  manager, 
who  is  chairman  of  the  planning  board.  The  duty  of  this 
planning  hoard  is  to  bring  about  cooperation  and  coordination 
in  the  activities  of  the  various  members  of  the  organization. 
The  sales-promotion  manager  has  charge  of  the  printing, 
advertising,  dealers'  service,  and  research.  The  merchan- 
dise manager  has  charge  of  orders,  claims,  service,  stocks, 
bills  and  stenographers.  The  duties  of  the  other  managers 
are  indicated  by  their  titles. 

(2)  The  Moody  Company  manufactures  office  appliances 
and  divides  the  country  into  seven  districts.  The  product 
of  the  company  is  such  that  there  are  no  repeat  sales.  In 
addition  to  other  duties  the  chief  sales  executives  are  given 
titles  of  regional  directors,  the  sales  manager  taking  one 
district,  the  secretary  of  the  company  another,  the  adver- 
tising manager  the  third,  the  sales-promotion  manager  the 
fourth,  etc.  In  order  to  develop  close  personal  contact, 
these  regional  directors  take  frequent  trips  into  the  districts, 
meet  the  sah^smen  personally,  discuss  problems  with  them, 
and  get  acquainted  with  general  conditions  in  the  territory. 
Every  six  months  districts  are  shifted  so  that  in  the  course  of 
three  years  and  a  half  the  sales  executives  have  for  a  period 
intimate  contact  with  personnel  and  problems  of  each  sales 
district.  In  turn,  the  sales  executives  meet  in  connnittee  to 
discuss  the  sales  problems  arising  in  the  different  districts. 
The  regional  directors,  although  outranking  the  general  sales 
manager  in  their  general  authority,  in  no  case  exercise  this 
authoritj'  except  to  work  their  divisional  sales  managers. 


SALES  ORGANIZATION  49 

The  board  of  directors  undertook  a  discussion  of 
the  Umitations  of  the  two  plans  as  outlined  above  by 
the  vice-president  in  charge  of  sales. 

Questions 

1.  What  plan,  with  modifications,  would  have  been 
best  suited  to  the  Rand  Company? 

2.  What  changes  should  be  suggested? 


Problem  13 
Decentralization  of  Sales  Organization 

The  Hempstead  Company  manufactures  loose-leaf 
devices  and  filing  equipment.  The  sales  force  operates 
under  the  direct  supervision  of  district  managers  with 
sales  offices  in  60  cities.  Four  factories  are  operated: 
one  in  Springfield,  Massachusetts;  the  second  in 
Grand  Rapids,  Michigan,  the  location  of  the  first 
factory  and  present  location  of  executive  offices;  the 
third  in  St.  Louis,  Missouri;  and  the  fourth  in  San 
Francisco,  California.  These  serve  their  surrounding 
territories,  division  being  made  on  state  lines.  The 
company  is  considering  the  decentralization  of  its  sales 
organization  along  similar  territorial  lines,  each  division 
to  be  placed  in  charge  of  a  division  manager.  It  is 
hoped  that  this  will  bring  about  more  intensive  cultiva- 
tion of  territory,  which  will  in  turn  require  an  enlarged 
sales  force.  It  is  proposed,  also,  to  add  a  research  and 
development  department,  the  province  of  which  will  be 
to  seek  out  new  and  unconsidered  lines  of  business, 
determine  their  needs  and  the  ways  wherein  the 
company's  equipment  can  be  made  to  serve  them  with 
the  highest  degree  of  efficiency. 


50         PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  What  action  would  you  take  with  reference  to 
the  new  division  of  territories  and  the  addition  of 
territorial  managers? 

2.  \\'ould  it  be  advisable  to  establish  executive 
offices  in  Chicago  or  New  York  or  at  some  other  point? 


Problem  14 
Departmentalization  of  Sales  Organization 

The  Marion  Rubber  Company,  of  Akron,  Ohio, 
manufactures  a  complete  line  of  rubber  footw^ear, 
including  tennis  and  other  styles  of  rubber-soled  shoes, 
rubber  boots,  rubbers,  and  rubber  overshoes;  also  a 
line  of  tires  which  have  been  w^idely  advertised  and 
distributed;  thirdly,  a  line  of  rubber  sundries — hot- 
water  bottles,  ice-bags,  etc.,  sold  usually  by  druggists. 

It  has  been  customary  for  the  company  to  have  three 
groups  of  salesmen :  one  selling  tires,  another  selling  the 
footwear  trade,  a  third  selling  rubber  sundries.  This 
plan  was  adopted  because  it  was  thought  that  the  single 
salesman  could  not  handle  satisfactorily  lines  sold  to 
various  classes  of  trade. 

The  general  manager  asserts  that  the  lines  are  not  so 
technical  that  special  men  are  required  for  each,  and 
that  given  a  man  with  sales  ability  it  would  be  possible 
for  him  to  handle  satisfactorily  the  three  classes  of 
trade.  The  sales  managers  for  these  three  lines  dis- 
agree, citing  the  instances  of  firms  both  in  their  own 
line  and  in  other  lines  in  which  men  are  employed  to 
specialize  on  particular  products. 

Questions 

1.  State  briefl}'  the  case  for  each  view. 

2.  If  the  general  manager's  view  prevails,  what  steps 
should  be  taken  to  reorganize  the  selling  force? 


SALES  ORGANIZATION  51 

Problem  15 
Sales  Departmentalization 

(a)  Wells  &  Company,  a  firm  of  textile  sales  agents, 
dispose  of  a  product  of  a  group  of  four  large  manufac- 
turers. Their  product  consists  of  the  following:  wash 
goods,  serges  and  flannels,  percales,  cambrics,  galateas 
and  flannels;  muslins,  voiles,  etc.;  etamines,  cretonnes, 
satins,  taffetas,  etc.;  shirtings,  percales  and  madras; 
twills,  drills  and  ducks;  corduroys;  black  and  white 
fancies;  fustians  and  moleskins;  khakis  and  uniform 
cloths;  velveteens  and  plushes;  blankets  and  robes; 
men's,  ladies'  and  children's  hosiery. 

Questions 

1.  On  what  basis  should  the  selling  house  depart- 
mentalize its  business,  if  at  all? 

2.  Should  specialty  salesmen  be  used  for  particular 
lines? 

3.  If  so,  what  line  should  be  grouped  for  individual 
salesmen? 


(6)  An  association  of  wholesale  grocers  in  financing 
an  investigation,  the  purpose  of  which  is  said  to  be  to 
produce  a  better  understanding  of  the  basic  principles 
of  wholesaling,  to  dispel  uncertainty  in  the  business  and 
to  eliminate  losses.  It  is  suggested  that  the  organiza- 
tion work  out  a  plan  or  system  of  uniform  operation  to 
be  adopted  by  all  wholesalers  and  to  be  of  a  character 
to  give  the  trade  the  system  it  absolutely  must  have 
in  order  to  be  successful.  The  need  of  departmental- 
ization in  a  wholesale  business  along  standard  lines 
is  pointed  out,  so  that  the  wholesaler  will  not  only 
know  what  his  business  in  the  aggregate  is,  but  what 
the  various  departments  and  items  making  up  all  of 


52         PROBLEMS  IN  SALES  MANAGEMENT 

the  stock  arc  producing  for  liim.  The  common 
staiuliirdizatioii  of  dopurtmeiits  in  the  trade  would 
make  it  possil^le  for  the  wholesaler  to  give  his  salesmen 
deiiuite  instructions  as  to  the  actual  cost  of  merchandis- 
ing, which  in  the  end  would  result  in  i)etter  service  to 
the  retailer  and  consumer. 

Questions 

1.  What  should  l)e  the  basis  for  departmentaliza- 
tion for  wholesale  grocers? 

2.  How  should  this  basis  for  departmentalization  be 
determined  so  as  to  fit  large  concerns,  as  well  as  small 
local  jobbers? 


Problem  10 
Product  Sales  Manager* 

The  Pure  Food  Mills  produce  a, group  of  patent, 
widely  advertised  cereals.  The  company  has  recently 
reorganized  its  sales  organization  to  provide  for 
geographical  division  of  the  country  under  a  definite 
number  of  division  sales  managers,  with  several  product 
sales  managers  who  are  held  responsible  for  \'olume  in 
their  particular  departments.  These  product  sales 
managers  have  no  voice  in  the  hiring,  firing  or  control 
of  salesmen.  Their  job  is  to  work  out  special  sales 
plans  for  their  product,  to  coach  the  salesmen  when 
required  regarding  the  sale  of  their  product  and  to 
make  sure  that  every  possible  avenue  of  distribution  is 
being  utilized  by  the  various  division  managers.  They 
rank  on  a  par  with  the  division  managers,  and  like  the 
division  managers  are  under  the  direct  control  of  the 
vice-president  in  charge  of  sales. 

*  Sales  Manager,  October,  1920.  Should  there  he  Separate  Departments 
and  Sales  Forces  for  IHffcrent  Pro(htct,'i  Made  hy  (hie  Concern/ 


SALES  ORGANIZATION  53 

Questions 

1.  What  are  the  advantages  and  disadvantages  of 
such  an  organization? 

2.  Would  the  plan  be  applicable  to  a  large  whole- 
sale dry-goods  concern  handling  piece  goods,  women's 
ready-to-wear,  knit  underwear  and  hosiery,  and  dry- 
goods  notions? 


Problem  17 
Sales  Organization — Financial  Limitations 

The  Smith  Graphite  Company  manufactures  graphite 
electrodes  used  in  electric  furnaces  and  electrolytic 
work,  graphite  powder  used  in  the  manufacture  of  elec- 
trodes as  battery  filler,  in  paint  pigments,  and,  when 
mixed  with  grease,  as  a  lubricant. 

The  market  for  electrodes  is  confined  to  the  limited 
number  of  electric  furnaces.  The  graphite  market  is 
also  limited,  and  one-fourth  of  the  total  production  of 
these  products  is  marketed  in  foreign  countries.  For 
the  electrodes  and  powder  there  is  a  regular  sales  organ- 
ization; but,  since  the  market  has  in  the  past  been  so 
definite  and  limited,  the  sales  force  has  been  very 
small.  The  electrodes  sales  force  divides  the  United 
States  into  four  districts,  one  man  covering  each.  The 
salesmen  are  technically  trained  men,  who  spend  about 
one-third  of  their  time  on  the  road  selling,  educating, 
and  giving  actual  and  potential  customers  advice  on 
electric  furnace  installation  and  operation. 

The  number  of  electric  furnaces  is  comparatively 
small.  All  electric  furnace  operators  are  known  and 
are  canvassed  by  mail  and  in  person.  The  greatest 
difficulty  in  increasing  the  sales  of  graphite  electrodes 


54  ]M{()IU>EMS  IN  SALES  MANAGEMENT 

is  that  the  number  of  electric  furnaces  is  very  hniited, 
and  it  is  difriciilt  to  a('C()nii)lish  the  proHniinary  sale  of 
the  electric  furnace  idea.  Of  the  total  sales  of  about 
$7,500,000  per  annum,  the  electrodes  and  graphite 
total  about  S6, 120,000,  the  sales  of  the  lubricant  about 
$380,000.  Since  tlie  lul)ricant  is  of  suj^erior  type  and 
can  be  utilized  very  successfully  for  automobiles  and  all 
mechanical  (l(>vices,  the  company  feels  that  there  is 
a  very  great  Held  for  expansion  of  this  product.  In- 
creased production  ofTers  no  difficulty,  and  there  is 
sufficient  working  cajMtal  so  that  with  the  present  small 
production,  Sir)(),0()()  or  $200,000  could  l)e  used  if 
necessary  for  developing  distribution  of  the  product. 

Questions 

1.  What  sort  of  organization  would  be  advisable? 

2.  What  would  be  possible  under  the  financial  cir- 
cumstances? 

3.  Could  the  existing  organization  be  modified  or 
expanded  to  take  care  of  this  active  sale  of  the  new 
product? 


Problem  18 
Sales  Organization — Financial  Limitations 

Mr.  King  has  obtained  possession  of  a  recipe  for  a 
prepared  pastry  flour,  samples  of  which  have  passed 
very  satisfactory  tests  when  submitted  to  cooking 
schools,  housewives,  and  chemists. 

He  finds  that  this  can  be  manufactured  for  him  at  a 
cost  of  6  cents  per  pound  in  bulk,  to  which  must  be 
added,  of  course,  the  cost  of  the  package,  if  he  desired 
to  market  it  as  a  specialty. 

To  secure  the  packages  economically,  it  is  advisable 
to  purchase  them  in  lots  of  25,000,  involving  the  outlay 


SALES  ORGANIZATION  55 

of  about  $2,000  for  these  and  packaging  machine. 
Settlement  with  the  milling  company  must  be  made 
every  15  days. 

Mr.  King  proposes  to  form  a  corporation  with  a 
capitalization  of  $10,000,  of  which  $5,000  will  be  paid 
in  cash. 

Questions 

1.  What  advice  would  be  given  to  Mr.  King  regard- 
ing his  sales  organization? 

2.  What  volume  of  sales  can  be  handled? 


Problem  19 
Manufacturer  to  Retailer  Sales  Organization 

The  Cummings  Company,  located  in  Dayton,  Ohio, 
manufactures  a  line  of  electric  accessories  for  auto- 
mobiles and  a  line  of  specialties  for  Ford  cars,  which 
are  sold  throughout  the  United  States  by  accessory 
and  hardware  jobbers.  Ten  salesmen  are  employed 
to  reach  the  jobbers.  The  jobbers  demand  a  discount 
of  45%  from  the  list  price;  in  turn,  they  grant  a  dis- 
count of  25%  to  retail  accessory  dealers. 

Officials  of  the  Cummings  Company  have  come  to 
the  conclusion  that  the  jobbers  are  not  taking  a  satis- 
factory amount  of  interest  in  the  Cummings  line  and 
that  they  are  not  pushing  their  sales  as  is  desired. 
They  recognize  that  the  jobber  handling  hundreds 
and  even  thousands  of  articles  can  not  or  will  not 
ordinarily  single  out  any  particular  line  for  more  than 
occasional  emphasis.  However,  complaints  have  fre- 
quently come  from  retailers  that  the  jobbers,  who  are 
assumed  to  be  handling  a  complete  line  of  Cummings 
accessories,    are   unable   to   supply   the   demands   of 


56  I'KoHLK.MS   IN   SAI.i:s  M  AN  A(  iK.MliN'i' 

retailors  and  attempt  to  suhstit  utc  accessories  made  by 
other  companies. 

In  conferences  anions  the  odicials  of  llie  company, 
two  suggestions  for  action  liave  been  brought  up: 
first,  that  of  (Migaging  in  an  extensive  advertising 
campaign  to  consumers  witii  a  view  of  compelling 
jobbers  to  keep  sufficient  stocks;  second,  a  reorganiza- 
tion of  the  sales  force  to  sell  direct  to  retailers.  Statis- 
tics published  by  the  National  Automobile  (^hamber 
of  Commerce  estimate  the  number  of  automobile 
supply  dealers  of  all  classes  at  47,416,  the  number  in  a 
state  varying  from  over  4,000  in  Pennsylvania  to  70 
in  Nevada.  There  are  1()  states  in  each  of  which  there 
are  located  over  1,000  sui)i)ly  dealers,  11  states  with 
500  to  1,000  dealers,  the  remaining  having  less  than 
500.  It  is  estimated  that  the  annual  cost  of  an  adver- 
tising campaign  of  necessary  size  would  be  approxi- 
mately $100,000. 

Questions 

1.  Is  there  any  way  of  estimating  the  financial 
advantage  or  burden  connected  with  the  second  plan 
of  direct  distribution  to  dealers? 

2.  Which  plan  is  to  be  prefen-ed? 

3.  Is  there  any  other  solution? 


Problem  20 
Or(;amzation  for  Sales  to  Manufacturers 

The  Hunter  Tanning  Machine  Company  produces 
a  line  of  machinery  used  for  tanning  and  for  belt- 
making.  Its  patents  are  important,  and  its  product 
is  in  demand  wherever  tanning  or  belt-making  estab- 
lishments are  found.  At  the  present  time,  the  machin- 
ery is  sold   through  a  manufacturers'   agent  located 


SALES  ORGANIZATION  57 

in  New  York,  while  the  foreign  sales  are  handled 
through  export  houses.  The  home  organization  is, 
therefore,  very  small. 

The  board  of  directors  have  come  to  the  conclusion 
that  the  present  sales  arrangements  are  not  satis- 
factory, that  the  company  is  not  getting  the  benefit 
of  any  degree  of  control  of  the  consumer  market;  in 
fact,  that  it  is  out  of  touch  with  its  customers  and  is 
at  the  mercy,  in  a  sense,  of  its  agents. 

The  board  of  directors  has,  therefore,  decided  that 
a  sales  organization  must  be  established  for  the  com- 
pany; but,  before  definitely  committing  itself,  wishes 
a  plan  to  be  submitted  from  which  they  can  obtain 
an  idea  as  to  the  probable  expense  of  establishing 
such  an  organization  and  the  results  to  be  obtained 
thereby. 

Question 

Under  the  circumstances,  what  type  of  sales  organi- 
zation would  you  suggest? 


Problem  21 
Sales  Organization  Biscuit  Manufacturer 

Manufacturers  of  crackers  and  biscuits,  such  as  the 
National  Biscuit  Company,  Loose-Wiles,  and  others, 
have  found  it  good  policy  to  have  salesmen  call  upon 
city  trade  at  least  every  two  weeks  and  town  and 
country  trade  at  intervals  of  three  weeks.  The  larger 
concerns  centralize  both  production  and  sales  forces 
according  to  the  territory  served  by  each  factory. 
The  buyers  are  retail  groceries  of  all  sizes,  ranging  from 
the  extremely  small  unit  store  to  the  largest  chain  store 
organization. 


58  I'ROBLEMS  IN  ISALES  MANAGEMENT 

Local  iiiteiTsts  in  Omaha,  Nebraska,  are  establishing 
an  independent  factory  for  the  manufacture  of  crackers 
and  biscuits.  The  board  of  directors,  in  selecting 
the  sales  manager,  have  asked  the  candidate  to  present 
an  outline  of  the  organization  necessary  showing  the 
number  of  salesmen  and  the  probable  weekly  payroll 
for  the  sales  organization,  so  that  the  management 
may  determine  the  amount  to  be  set  aside  for  working 
capital  on  account  of  sales  operations.  In  production 
costs,  it  is  expected  that  the  new  plant  will  be  on  a 
par  with  manufacturers  of  St.  Louis,  Chicago,  and 
other  competing  cities.  It  is  planned  to  cover  thor- 
oughly the  city  of  Omaha  and  surrounding  territory 
within  a  radius  of  one  hundred  miles.  It  is  recognized 
that  in  its  own  territory  the  independent  plant  will 
meet  the  competition  of  representatives  of  two  large 
consolidations  and  also  the  competition  of  large  manu- 
facturing jobbers  located  in  Chicago  and  St.  Louis 
who,  through  traveling  salesmen,  reach  all  the  more 
important  grocers  in  that  neighborhood  at  least  every 
three  or  four  weeks. 

Question 

How  should  the  sales  manager  prepare  the  statement 
requested? 


Problem  22 
Shaping  the  Organization  to  Provide  for  Expansion 

The  Crane  Automobile  Company  has  been  organized 
to  place  a  high-grade  automobile  on  the  market. 
Sales  headquarters  and  plant  are  to  be  located  at 
Indianapolis.  The  president  is  particularly  interested 
in  the  production  end  and  has  assumed  the  position 
of^works  manager.     The  output  as  planned  will  be 


SALES  ORGANIZATION  59 

approximately  3,000  cars  the  first  year  and  6,000 
cars  the  second.  Various  bodies  are  to  be  offered, 
the  touring  body  selling  at  about  $4,000.  It  is  planned 
to  give  a  discount  of  30%  to  dealers.  With  this 
volume  of  production  and  the  expected  increase  in 
capacity,  the  directors  are  convinced  that  the  dis- 
tribution must  be  national  and  that  a  corresponding 
organization  must  be  built  up.  They  can  without 
difficulty  set  aside  $300,000  for  handling  distribution. 
More  can  be  secured  if  necessary,  but  at  a  sacrifice 
which  the  directors  are  not  willing  to  make  unless 
compelled  to  do  so. 

It  is  expected  that  the  first  cars  will  be  ready  for 
shipment  during  the  second  half  of  February  and  that 
the  sales  department  should  be  able  to  dispose  of 
cars  as  fast  as  produced,  at  least  until  the  first  of 
September,  at  which  time  the  capital  available  for  the 
handling  of  sales  will  have  been  increased.  According 
to  the  trade  custom  it  is  expected  that  cars  will  be 
sold  on  sight-draft,  bill-of-lading  terms. 

Questions 

1.  How  should  the  sales  manager  estimate  the 
amount  of  capital  required  to  attain  national  distribu- 
tion within  the  time  limit? 

2.  Submit  a  proposal  as  to  the  type  of  organization 
advisable  and  possible  under  the  financial  cir- 
cumstances. 


60         PUUBLEMS  IN  SALliS  MANAGEMENT 

puohlkm  '■2.s 
Ad.vi'tinc   Sai.ks  ()|{(; anization  to  X'olimk  of  Business 

Tho  W'vinaii  ( '()iiii)aiiy,  a  wlioli^salo  drv-goods  con- 
cern located  in  Minneapolis,  carries  a  general  line  of 
dry-goods,  including  piece  goods,  women's  ready-to- 
wear,  underwear,  notions,  and  some  men's  furnishings. 
Its  market  is  limited  by  the  competition  of  C.'hicago 
houses  on  the  east  and  south  and  by  transportation 
costs  on  the  west. 

In  the  experience  of  the  company,  it  has  seemed  that 
Minnesota,  Iowa,  Nebraska,  North  and  South  Dakota, 
Montana  and  Wisconsin  constitute  the  logical  ter- 
ritory. The  concern  has  recently  changed  hands. 
The  new  sales  manager,  in  analyzing  his  problems,  is 
attempting  to  formulate  a  plan  for  an  ideal  organization. 
Sales  next  year  will  probably  be  around  S7, 500, 000. 
It  is  assumed  that  the  good  salesman  can  sell  about 
$80,000  a  year.  In  addition,  the  new  company  plans 
to  stress  mail-order  sales  on  the  basis  of  a  compre- 
hensive catalog  issued  twice  a  year.  Salesmen  visit 
customers  on  the  average  of  four  times  each  year. 

Questions 

1 .  What  organization  would  be  necessary  to  handle 
this  volume  of  business? 

2.  What  other  obtainable  facts  would  be  helpful 
in    determining  an  organization? 


SALES  ORGANIZATION  61 

Problem  24 

Adjusting  Sales  Organization  to  Increase 

OF  Productive  Capacity 

The  Fernald  Motor  Car  Company,  of  Milwaukee, 
manufactures  motor  cars  of  the  passenger  type. 
It  has  no  direct  factory  branches,  but  sells  through 
distributors  appointed  to  act  as  jobbers  and  agreeing 
to  take  at  least  50  cars  a  year.  Subject  to  the 
approval  of  the  manufacturers,  these  distributors 
appoint  local  dealers  in  their  respective  territories,  for 
whose  credit  they  assume  responsibility.  The  cars 
are  shipped  direct,  either  to  dealers  or  distributors,  from 
the  factory.  When  contemplated  additions  to  the 
factory  are  completed,  the  annual  output  of  the  factory 
will  be  around  12,000  cars,  amounting  to  approxi- 
mately $30,000,000. 

The  sales  department  is  headed  by  a  general  sales 
manager  under  whom  are  four  territorial  sales  mana- 
gers— Canadian,  southern,  southwestern,  and  north- 
western— whose  duty  is  to  keep  constantly  in  touch 
with  dealers  and  distributors  in  these  territories  in  a 
supervisory  capacity. 

Advertising  work,  carried  on  under  the  direction  of 
the  advertising  manager,  includes  the  preparation  of 
all  advertising  copy  and  sales  literature.  A  sub- 
department  of  the  advertising  department,  the  promo- 
tion department,  produces  monthly  the  house  organ 
circulated  among  owners,  distributors,  and  dealers. 
Export  sales  are  handled  as  a  separate  department 
by  an  export  house  in  New  York,  which  also  takes 
charge  of  all  export  advertising  done  in  foreign 
publications.  There  are  really  no  definite  sales  dis- 
tricts in  the  strict  sense  of  the  word.  While  the  ad- 
vertising department  is  conducted  as  a  separate  de- 
partment, it  comes  under  the  supervision  of  the  general 
sales  manager.  The  credit  department  is  entirely 
separate  from  the  sales  department.  Sales  conferences 
are  held  when  deemed  necessary  and  not  at  any  stated 
intervals. 


()2         PROBLEMS  IN  SALES  MANAGEMENT 

Question 
.Siii('(>  tlie  ('(jiiU'inphitod  i)roducli()ii  involves  a  50% 
increase  over  previous  production,  will  changes  have 
to  bo  made  in  tho  sales  organization? 


Problem  25 
Sales  Organization  for  Contract  Sales 

(a)  The  Sweets  Company  of  America  manufactures 
a  small  line  of  candy  specialties  put  up  in  5-cent 
packages.  According  to  published  reports,  the  direc- 
tors appear  to  have  definitely  adopted  the  policy  of 
concentrating  selling  efforts  upon  large  distributing 
agencies.  Within  a  short  period  of  time,  arrangements 
have  been  made  to  distribute  the  entire  production  of 
the  plant  through  chain  stores  encircling  the  country. 

Among  the  contracts  of  the  company  are  those  with 
the  Union  News  Company,  the  United  Cigar  Stores 
Company,  the  Schulte  Company,  the  Great  Atlantic 
and  Pacific  Tea  Company,  and  the  Liggett  stores. 
The  sales  of  the  company  amounted  to  over  S2, 000,000 
in  1919. 

Question 
What  sales  organization  is  necessary? 


SALES  ORGANIZATION  63 

(b)  A  southern  chemist,  after  four  years  of  ex- 
perimenting, has  succeeded  in  making  news  print 
paper  from  native  Florida  saw-grass.  A  company  is 
being  formed  under  the  name  of  the  Modern  Pulp 
and  Paper  Corporation,  and  the  promoters  are  planning 
to  establish  the  initial  saw-grass  pulp  mill  in  Florida 
within  a  few  months.  It  is  also  planned  to  build 
altogether  10  mills  in  various  parts  of  the  state. 
There  are  millions  of  acres  in  Florida,  and  it  is  reported 
that  the  company  has  enough  material  under  its 
control  to  run  many  mills  in  addition  to  the  10  con- 
templated. 

Due  to  differences  of  many  leading  newspapers  with 
the  chief  manufacturers  of  news  print  paper  in  the 
United  States  during  the  war  period,  it  is  expected 
that  there  will  be  no  unusual  difficulty  in  breaking 
into  the  news  print  market  and  of  securing  contracts 
with  a  sufficient  number  of  newspapers  to  take  the 
entire  output. 

Question 
Make  out  a  plan  for  a  sales  organization  for  the 
company,   assuming  that  it  is  able   to  manufacture 
about  200  tons  per  day  during  the  first  year. 


Problem  26 
Sales  Organization — Type  of  Customer 

Among  sales  organizations,  one  will  occasionally 
find  examples  of  sales  departmentalization  not  accord- 
ing to  production  or  territory,  but  according  to  the 
type  of  customer  to  whom  goods  are  to  be  sold.  The 
Chase  Company,  a  firm  of  wholesale  grocers  which 
maintains  one  wholesale  establishment  and  three 
retail  stores  in  Chicago,  has  a  general  sales  manager 
under  whom  are  the  following  sales  managers:  (1) 
sales  manager  of  the  wholesale  consumer  department; 


M  IM{()HM:MS   in  SALlvS  MANAGEMENT 

(2)  sjilos  iiiaiuiser  of  the  retail  department;  (3)  sales 
inanast'i"  <>f  dc^alor  stores. 

A  lar^e  printinfi;  estal)lislmi('nt,  wliich  makes  a 
specialty  of  i)rintiiif:;  !)o()ks,  has  two  sak^s  managers, 
one  ('alU>(i  sak's  manager  and  the  other  specialty  sales 
manager.  The  specialty  sales  manager  handles  all 
sales  relations  with  a  small  number  of  ])ig  customers, 
usually  publishing  houses.  He  advises  them  on  the 
set-up  of  books  and  endeavors  to  get  as  much  of 
their  business  as  possible.  The  sales  manager  has 
charge  of  all  other  sales  and  has  under  him  the  several 
salesmen  who  approach  publishing  houses  and  indi- 
viduals who  have  books  to  be  printed. 

Questions 

1.  What  justification  is  there  for  departmentaliza- 
tion ui)on  the  basis  of  type  of  buyer? 

2.  Under  what  conditions  is  such  departmentaliza- 
tion advisable? 


Phoblem  27 

Functions  of  the  Sales  Manager 

The  Bureau  of  Foreign  and  Domestic  Commerce,  *in 
its  report  upon  the  men's  clothing  industry,  makes  the 
following  statement: 

The  several  methods  of  (list ill )utiug  men's  factory-made 
clothino-  arc  as  follows:  by  selling  direct  to  the  retail  trade, 
by  'tailoring  to  the  trade',  by  mail  order,  or  by  selilng  to 
jobbers.  The  bulk  of  men's  factory-made  clothing  is  sold 
direct  to  retail  stores.  In  order  to  reach  this  trade,  the 
manufacturer  employs  traveling  salesmen  who  cover  a 
defined  territory  and  call  personally  on  the  retailers. 

*The  Men's  Factory-Made  Clothing  Industry,  Department  of  Com 
merce,  Miscellaneous  Series  No.  34,  p.  239 


SALES  ORGANIZATION  65 

Practically  all  men's  rcady-mado  clothing  is  made  to  fill 
orders  and  little,  particularly  in  the  higher-priced  lines,  is 
made  for  stock. 

The  manufacturer  has  new  designs  perfected  well  in 
advance  of  the  opening  of  the  season.  Sample  garments 
are  made  up  for  each  traveling  salesman,  and  in  addition 
'swatches',  or  samples,  of  various  styles  of  cloth,  are  carried. 
The  salesman  submits  these  samples  to  the  retailers  in  his 
territory  and  takes  orders  for  future  delivery,  these  orders 
being  sent  t(j  the  factory  and  there  made  up  according  to 
specifications.  Orders  are  recorded  three  to  six  months 
l)efore  delivery. 

There  has  been  a  growing  tendency  in  recent  years  for 
manufacturers  to  do  'tailoring  to  the  trade'.  This  branch 
of  the  industry  is  making  strides,  and  certain  concerns 
confine  themselves  entirely  to  this  line  of  business.  Others 
use  it  as  a  'side  line',  in  addition  to  dealing  with  retailers  in 
readj-made  clothing.  The  initial  expense  is  very  large, 
since  it  requires  the  making  up  of  an  entire  line  of  samples 
bound  in  book  form,  and  in  addition  very  frequently  made- 
up  models  are  furnished.  It  is  said,  however,  that  the  re- 
turns justify  the  expense,  since  ventures  in  this  line  have 
proved  very  profital)le.  'Tailoring  to  the  trade'  is  handled 
for  the  manufacturer  by  merchant  tailors  or,  in  the  smaller 
towns  and. villages,  by  retail  stores.  The  customer  selects 
the  style  of  cloth  he  desires  from  the  book  of  samples,  his 
measure  is  taken,  and  the  order  sent  to  the  factory.  The 
garment  is  made  up  and  sent  for  a  try-on,  and  if  necessary, 
is  returned  to  the  factory  for  proper  alterations. 

Mail-order  houses  sell  entirely  through  catalogs  or  by 
advertising.  Both  ready-made  clothing  and  made-to-order 
garments  are  sold  in  this  way.  Some  mail-order  houses  have 
their  own  factories,  while  others  buy  from  the  regular 
manufacturers.  It  is  also  said  that  mail-order  houses  buy  up 
the  left-over  goods  and  odds  and  ends  that  the  manufacturer 
is  unable  to  sell  to  the  retail  trade.  The  greater  part  of  the 
clothing  sold  by  mail-order  houses  is  disposed  of  in  small 
towns  or  in  rural  districts. 

Mail-order  houses  that  make  clothing  to  individual  order 
secure  their  trade  principally  through  advertising.  Cloth 
samples  are  sent  to  the  customer,  from  which  he  makes  his 
selection;  he  has  his  measure  taken  and  sends  the  order  to 
the  mail-order  house,  where  the  garment  is  made  up.  This 
branch  of  the  mail-order  business  is  similar  to  'tailoring  to 
the  trade'. 

There  is  very  little  field  for  the  jobber  now  in  handling 
men's   factory-made   clothing.     Changed  conditions  in  the 


GG         PU()lil.i:MS  l\  SALi;s  MANAGEMENT 

industry  have  cjiuscd  almost  I  he  entire  elimination  of  the 
jobber  as  a  medium  of  distrii)ution.  The  maiuifacturers 
iiave  preferred  to  deal  directly  with  their  (uistomers  and 
desire  to  estal)lish  a  custom  which  is  their  own  and  upon 
wiiich  they  <'an  rely.  The  little  business  that  is  now  done 
with  jobbers  is  the  cheapest  only,  and  in  job  lots  and  left- 
over stock. 

The  statement  has  been  made  that,  in  the  clothing 
in(kistry  in  the  past,  very  Httle  study  has  been  accorded 
to  tlie  manaf2;onient  of  sales;  in  fact,  it  is  stated  in 
1915  that  it  was  the  last  of  all  big  businesses  to  recog- 
nize the  necessity  for  scientific  management. 

Every  concern  needs  a  sales  manager  who  can: 

(1)  Prepare  a  comprehensive  analysis  of  the  entire  sales; 

(2)  Tell  whicii  salesmen  are  most  profitable; 

(3)  See  that  each  salesman  secures  the  volume  of  business 
the  line  is  entitled  to  in  the  territory  assigned  him; 

(4)  Compare  tlie  variations  in  cancelations  and  credit 
losses  as  to  territories  and  study  divergencies; 

(5)  Compare  the  expenses  of  men  in  different  districts 
and  anah'ze  reasons  for  variations; 

(6)  Prevent  oveilapping  of  salesmen  and  concentrate 
territory,  since  the  question  of  personal  acquaintanceship  is 
not  so  important  a  factor  in  selling  as  formerly; 

(7)  Find  employment  for  the  men  during  the  seven  or 
eight  months  of  the  year  they  are  not  traveling; 

(8)  Supply  salesmen  with  technical  knowledge  as  to  the 
goods.* 

Question 
Would  this  description  constitute  a  list  of  functions 
of  the  sales  managers  of  clothing  concerns  of  the  types 
described? 


*Printcrs'  Ink. 


SALES  ORGANIZATION  67 

Problem  i^8 
Qualifications  of  Sales  Executives 

Mr,  Gowin,  in  his  book,  The  Selection  and  Training 
of  the  Business  Executive,''  states  that  on  the  basis  of 
an  investigation  carried  on  among  276  firms,  the  fol- 
lowing are  the  chief  requisites  of  the  executive: 

(Education  and  exix'riouce  as  such  omitted) 

Order  determined  Average  rank 

by  average  rank  (Quality  assigned 

1  Judgment  3.21 

(Reasoning  ability,  accuracy  in 
conclusions,  ability  to  profit  by 
experience.) 

2  .  Initiative  4.30 

(Alertness,  imagination,  original- 
ity, independence  in  thinking.) 

3  Integrity  4 .  58 

(Truthfulness,  honesty,  sincerity.) 

4  Organizing  Ability  4.71 

(Sj'stematizing,  classifying  ac- 
cording to  functions,  planning 
and  delegating.) 

5  Health  5 .  98 

(Bodily  vigor,  good  sight,  hear- 
ing, etc.,  included.) 

G  Perseverance  6 .  40 

(Industry,  am])ition,  concentra- 
tion.) 

7  Aggressiveness  6.83 

(Energy,  courage,  domination  ])v 
will.) 

8  Openmindedness  7 . 09 

(Reasonableness,  teachableness, 
openness  to  new  ideas.) 

9  Cooperativeness  7 .  97 

(Unselfishness,  kindness,  cheer- 
fulness, tact,  loyalty.) 


()S       pi{()HLI';ms  in  salks  management 

Order  dctcnniiu'd  Avcnific  rank 

l)y  avri-a^c  rank  (^ii;ility  assigned 

10  (  'o.Ml'KI  invKXKss  !>.6() 

(Interest  in  playinj^  tlie  business 
M;anu'.) 

11  ('oNTiu)L  OF  Emotions  9.81 

(Freedom  from  outbursts  of  auger 
or  touchiness.) 

12  Refinement-  10.30 

(Courtesy,  manners,  jieneral  cul- 
ture.) 

13  Appearance  10.51 

(Well-groomed  ai)pearanee,  good 
carriage,  pleasing  facial  expres- 
sion, voice,  etc.) 

14  Sense  OF  ITrMOu  12. 2G 

Questions 

1.  To  what  extent  do  these  apply  to  the  sales 
manager? 

2.  Do  the  qualifications  required  in  a  sales  manager 
varj'  with  tlie  type  of  product  to  be  sold? 

3.  Does  the  experience  of  an  executive  who  has  suc- 
cessfully sold  concrete  buildings  unfit  him  to  direct  the 
sales  organization  of  a  grocery  specialty? 

4.  It  is  frcciuently  said  that  most  men  do  not 
possess  both  analytical  and  executive  ability.  To 
what  extent  does  that  fact  bear  upon  the  division  of 
functions  of  planning  and  performance  within  a  sales 
organization? 


SALES  ORGANIZATION  69 

Problem  29 
Sales  Manager  in  Wholesale  Concern 

In  comparatively  few  wholesale  establishments  or 
larger  retail  stores  are  sales  managers  employed. 
Sales  of  the  various  departments  are  ordinarily  in 
charge  of  buyers;  that  is,  the  buyer  is  the  head  of  the 
department,  having  charge  not  only  of  buying,  but 
also  of  selling.  There  are  notable  exceptions  to  the 
general  rule  and  one  of  these,  a  large  wholesale  grocer 
in  Chicago,  is  said  to  have  demonstrated  beyond 
question  the  advisability  of  having  a  sales  manager  by 
the  way  in  which  he  was  able  to  meet  the  situation 
created  by  the  falling  market  of  1920-21.  Likewise, 
the  few  retail  stores  which  have  added  officials  whose 
view-point  was  primarily  that  of  selling  are  said  to 
have  been  able  to  weather  the  adjustment  period  more 
successfully  than  those  in  charge  of  buyers.  It  is 
estimated,  however,  that,  out  of  over  4,000  wholesale 
grocers,  less  than  10%  have  a  man  holding  the  posi- 
tion of  sales  manager. 

The  Lawson  Company,  located  in  Columbus,  Ohio, 
operates  a  wholesale  grocery  concern  in  the  territory 
naturally  tributary  to  Columbus.  Its  field  is  limited 
on  the  north  by  Cleveland  and  on  the  south  by  Cin- 
cinnati. It  employs  ten  salesmen,  who  call  upon  the 
trade  at  least  every  two  weeks.  During  the  period 
of  adjustment,  the  president  feels  that  sales  have  not 
been  what  should  be  expected  even  under  the  condi- 
tions prevailing.  Furthermore,  large  losses  were  taken 
on  inventory  when  the  books  were  closed  in  December, 
1920.  The  president  has  consulted  with  several  men 
experienced  in  sales  management,  who  advised  him 
that  the  creation  of  the  position  of  sales  manager  and 
the  change  in  organization  to  take  control  of  sales 
from  the  hands  of  buyers  would  benefit  the  company. 

Question 
Write    a    letter   to    the    president,    embodying    the 
arguments  for  a  sales  manager  and  meeting  the  ob- 
jections which  will  be  brought  up. 


70  IMlol'.LIvMS   IX  SALKS  MANA(  ;i:M1<:XT 

I'koulkm  ;{(» 
Salks  ()ii(iA\iZATi()N — Sklioction  OF  Salks  Manaokr 

The  Daly  ('onipany  arc  manufacturers  of,  laundry 
and  toilet  soaps  and  special  jjrej^Jirations,  specializing 
upon  a  comparatively  few  i)nKlucts:  one  a  soap  flake 
for  washing  fine  fabrics,  another  a  (luality  laundry 
soap,  the  third  imxluct  a  dye  soap.  These,  with  two 
or  three  other  products  all  of  which  luive  heen  widely 
advertisetl,  make  up  the  entire  line. 

Up  to  1919  the  entire  output  was  sold  through 
manufacturers'  agents  in  New  York,  who  had  charge  of 
the  advertising  and  who  had  been  successful  in  creating 
a  nation-wide  market  for  at  least  one  of  the  products. 
These  agents  also  marketed  a  certain  highly  adver- 
tised milk  chocolate  and  a  widely  known  witch  hazel 
preparation  and  a  number  of  other  articles  of  diverse 
character.  The  manufacturers'  agents  bought  these 
soap  products,  maintained  their  own  sales  organization 
and  took  care  of  the  advertising,  but  orders  secured 
were  turned  over  to  the  factory  located  in  Boston, 
and  shipments  were  made  direct  to  buyers. 

In  July,  1919,  the  general  manager  of  the  Daly 
Company  was  appraised  of  the  vote  of  the  board  of 
directors  that  the  contract  with  the  manufacturers' 
agents,  which  expired  by  limitation  on  October  1, 
1919,  w'as  not  to  be  renew^ed;  further,  that  the  Daly 
Company  was  to  establish  its  owmi  selling  organization, 
to  begin  operations  October  1,  1919.  The  company 
sells  through  jobbers,  but  the  sales  force  must  be 
large  enough  to  call  on  retailers  once  a  month,  as  well 
as  call  upon  jobbers. 

(a)  The  general  manager  is  asked  to  make  recom- 
mendations for  position  of  sales  manager.  There  is 
no  logical  candidate  now  in  the  organization. 

Question 
How  should  the  general  manager  go  about  finding 
a  sales  manager? 


SALES  ORGANIZATION  71 

(6)  The  sales  manager  was  asked,  before  entering 
upon  the  task  of  creating  a  new  sales  organization,  to 
submit  a  plan  of  the  work  required.  The  newly 
appointed  sales  manager  found  that  no  information, 
except  a  list  of  customers  and  credit  ratings,  could  be 
secured  from  the  selling  agents.  These  lists  revealed 
the  fact  that  the  soap  is  sold  over  the  entire  United 
States  and  that  distribution  of  one  of  the  products  is 
practically  70  per  cent. 

Question 
What  steps  should  the  sales  manager  have  taken  in 
order  to  create  this  organization? 


Problem  31 

Duties  and  Authority  of  Sales  Managers,  Branch 

Managers  and  Salesmen 

The  chart  on  page  72  is  a  chart  of  the  organization 
of  a  large  manufacturer  of  clocks  and  watches. 

Question 
Prepare  a  section  of  the  organization  manual  cover- 
ing the  duties  of  the  marketing  manager  and  relation 
to  the  rest  of  the  sales  organization,  the  duties  of  the 
branch  office  sales  manager,  and  the  duties  of  salesmen. 


72 


PRolil.KMS  IN  SALP:S  MANAGEMENT 


GENERAL  MANAGER 


I.   Domestic  Sales 

Division  (General  Branch 

Office  Manager) 

ze: 


II.  Planning 

Division  (Marketing 

Manager) 


Sain  Maiugri 


Diitrirt 
Supcrviiori 


III.  Foreign  Sales 

Division  (Export 

Manager) 


Bureau  of  Dir 
Mail  Servic 


Bureau  of 
Standard  Practice 


3upervi»on 


Consutnen  Consumers 


Problem  32 
Organization  for  Supp:rvision  of  Salesmen 

The  sales  manager  of  the  Chapman  Company, 
manufacturing  an  advertised,  trade-marked  clothing 
specialty  which  it  distributes  to  retailers  throughout 
the  territory  east  of  the  Mississippi  and  north  of  the 
Ohio  (including  New  England),  has  discovered  a  weak- 
ness in  its  sales  organization  in  that  the  number  of 
accounts  actually  sold  has  grown  smaller  during  the 
past  year.  The  decline  in  sales  is  attributed  more  to 
the  business  depression  than  to  loss  of  customers,  but 
the  sales  manager  considers  the  decline  in  number  of 
customers  a  danger  signal. 

The  sales  manager  finds  that  there  is  no  organized 
means  of  getting  new  accounts  or  of  reselling  accounts 
which  have  stopped  buying.  So  long  as  sales  volume 
increases,  salesmen  are  satisfied  with  their  incomes  and 
evade  the  somewhat  unpleasant  duty  of  settling 
dilTerences  or  of  reselling  those  customers  who  have 
ceased  active  buying.    Furthermore,  the  selling  of  new 


SALES  ORGANIZATION  73 

accounts  is  much  more  difficult  than  the  taking  of 
repeat  orders.  During  the  war,  when  the  problem 
was  one  of  keeping  orders  down  within  production 
limits  rather  than  selling,  it  was  not  expected  that 
prospects  for  new  accounts  would  be  actively  worked. 
The  sales  organization  has  failed  to  discover  that  the 
different  conditions  of  1921  demand  active  work  among 
prospects  to  increase  the  number  of  accounts.  At  the 
present  time,  salesmen  report  directly  to  the  central 
sales  office  in  Newark,  New  Jersey. 

The  assistant  sales  manager  proposes  that  a  change 
be  made  on  the  basis  of  compensation,  so  as  to  recognize 
the  opening  up  of  new  accounts.  The  sales  manager 
is  in  favor  of  appointing  four  supervisors  of  salesmen: 
one  for  eastern  territory  outside  the  home  office 
territory,  one  for  the  Middle  West,  a  third  with  head- 
quarters in  St.  Louis,  and  a  fourth  with  headquarters 
in  Atlanta.  It  will  be  possible  in  these  locations  for 
the  sales  supervisor  to  work  with  salesmen,  the  number 
in  each  group  varying  from  eight  to  twelve. 

Question 
Assuming  that  competent  supervisors  can  be  secured, 
what  advantages  are  there  in  this  plan  over  change  in 
basis  of  payment  to  recognize  new  accounts? 


Problem  33 
Qualifications  of  Salesmen* 

Several  years  ago  the  Sales  Managers'  Bureau  of  the 
St.  Louis  Chamber  of  Commerce  made  up  a  question- 
naire asking  the  12  essential  qualifications  of  a 
salesman.       These    questionnaires    were    distributed 

*There  are  numerous  articles  in  Printers'  Ink,  Sales  Management 
and  Sales  Manager,  in  addition  to  material  found  in  books  on  sales- 
manship. See,  for  example,  Sales  Manager,  January,  February,  March, 
1921;  Salrs  Mnnnqemenl,  July,  October,  1920. 


74 


l'U(  )liLi;.MS   1\  SALi;s  MANACilOMJONT 


uiiionp;  tho  4()()  salos  luaruifiicrs  who  were  inonibers  of 
the .  association  at  tliat  tiiiic.  The  result  of  this 
questionnaire  was  the  (•oinpilatioii  of  a  "Compendium 
of  the  Twelve  i^sseutial  (Qualifications  of  a  Salesman." 
This  compendium  was  the  standard  adopted  by  the 
St.  Louis  sales  directors  as  to  the  component  attributes 
of  a  salesman. 


Good  (  'mauac  ikh: 

Personality  : 

Health  : 

Mentality  : 

Concentration  : 
Industry : 
Self-Confidence  : 
Punctuality  : 

Tact: 

Initiative  : 
Resourcefulness  : 

Knowledge  of 
Goods: 


R('])utati()n,  Habits,  Iiitcjiiity,  Self- 
control,  Koliability,  Truthfulness, 
Honesty,  Fairness,  Loyalty,  Sin- 
cerity, Sobriety,  Decency. 

Individuality,  Address,  Appearance, 
Cleanliness^  Manners,  Voice. 

Vitality,  Correct  Habits  of  Life. 

Education,  Openmindedness,  Com- 
mon Sense,  Understanding,  Native 
Intelligence,  Native  Ability. 

Application,  Tenacity,  Patience,  Per- 
severance, Student,  Self-Analysis. 

Energy,  Capacity  for  Work,  Enthu- 
siasm, Optimism,  Ambition. 

Courage,  Preparedness,  Conviction 
of  Competency. 

Promptness  in  All  Dealings  with 
Customer  and  House.  Readiness  of 
Decision  and  Action.  Brevity,  Di- 
rectness. 

Intuition,  S^'mpathetic  Comprehen- 
sion. 

Power  of  Origination.  Visualization. 
Alertness,  Oljservation,  Imagination. 

To  Include  Knowledge  of  Business 
Methods  and  Policy  of  House,  as 
well  as  of  Competitors. 


Question 

Using  this  list  as  a  basis,  prepare  a  rating  scale  which 
might  be  used  as  an  aid  to  a  sales  executive  in  select- 
ing salesmen. 


SALES  ORGANIZATION  75 

Problem  34 
Specialty  Salesmen 

(a)  The. Eastman  Shoe  Company  for  many  years 
has  sold  an  extensively  advertised  line  of  women's 
shoes  throughout  the  United  States.  Recently,  at 
the  re(|uest  of  customers,  the  company  put  in  a  line 
of  girls'  shoes.  The  problem  now  faces  the  manage- 
ment whether  it  should  use  a  different  sales  force  to 
sell  the  new  line;  at  the  present  time  it  is  handled  by 
the  regular  sales  force.  There  are  numerous  objections 
to  placing  these  shoes  with  regular  salesmen : 

(1)  The  children's  shoe  Inisiness  is  different  in  many 
respects  from  that  of  adults. 

Styles  are  different. 

It  is  the  tendency  of  retailers  to  bin-  children's 
shoes  more  often  than  women's  shoes. 

The  total  available  volume  of  business  from  chil- 
dren's shoes  is  much  less  than  the  available  volume  of 
business  from  adults'. 

(2)  It  tends  to  complicate  the  already  difficult  line  of 
this  compan3\  The  Kastman  Company  salesman  sells  one  of 
the  most  complicated  of  all  lines  of  women's  shoes.  While 
there  are  many  different  styles  and  p;rades  of  women's  shoes, 
most  manufacturers  make  only  one  or  two  grades  of  the 
various  styles.  The  Eastman  l)rand  shoes  arc  made  in  six 
grades. 

(3)  The  present  sales  force  is  not  in  a  position  to  give  all 
the  study  and  attention  it  should  to  the  competition  in 
girls'  shoes  and  to  the  methods  of  presentation  in  selling. 

(4)  A  good  salesman  can  call  with  the  regular  line  of 
women's  shoes  and  place  an  order  with  an  exclusive  agent 
for  an  amount  which  represents  all  that  man  will  then  feel 
able  to  give  at  the  time.  If  a  salesman  called  subsequently 
with  girls'  shoes,  he  would  probably  have  a  better  opportunit}' 
to  get  a  respecta})le  order,  ])ecause  the  customer  would  not 
be  so  much  burdened  by  the  thought  of  the  large  order  for 
women's  shoes  which  he  had  placed. 

The  girls'  shoes  use  the  same  brand  names  as  the 
women's  shoes. 

Question 
What  should  be  the  decision? 


7()         1'1{()HLEMS  IN  SALK8  MANAGEMENT 

(h)  A  similar  pr()l)l(Mii  is  presented  by  another  line. 
Since  1910  the  Kustnuui  Shoe  Company  has  manu- 
factured a  corrective  shoe  similar  to  the  Ground 
riripjier  sh()(\  For  a  number  of  years  the  reguhir  sales 
force  carried  this  slioe,  but  without  marked  success. 
Finally,  one  salesman  was  employed  to  visit  large  cities 
with  this  one  typo  of  shoe.  He  has  been  very  success- 
ful in  l)uikUng  up  a  business,  and  the  company  is  now 
planning  to  give  him  assistants  to  cover  smaller  towns. 
The  shoe  calls  for  an  entirely  different  method  of  pre- 
sentation by  the  salesmen  and  for  specialized  knowl- 
edge. The  regular  salesmen,  with  their  already  com- 
plicated lines,  have  not  been  successful  in  correctly 
presenting  it. 

Questio7i 

Should  specialty  salesmen  be  hired  to  cover  the 
country? 


Problem  35 
Junior  Salesmen 

The  Hayward  Manufacturing  Company,  located  in 
Rochester,  New  York,  manufactures  a  patent  cereal 
which  is  sold  through  jobbers.  A  large  sales  organiza- 
tion is  maintained  to  solicit  orders  from  retail  grocers. 
The  orders  received  are  turned  over  to  jol)bers  specified. 
In  the  early  part  of  1921,  Mr.  Richard  Humphrey, 
sales  manager,  was  confronted  with  the  problem  of 
increasing  sales.  The  use  of  junior  salesmen  was  sug- 
gested as  one  means  of  accomplishing  this. 

Mr.  Humi)hrev  found  that  the  Peters  Company, 
manufacturers  of  office  devices,  had  adopted  the  plan 
of  using  junior  salesmen  as  assistants  to  their  regular 
or  senior  salesmen  and  that  the  plan  had  worked 
successfully.  This  compau}'  selected  its  juniors  from 
the  ranks  of  applicants  for  salesmen,  and  a  period  of 
experience  as  junior  salesmen  under  the  direction  of 


SALES  ORGANIZATION  77 

the  senior  men  was  looked  upon  as  a  continuation  of 
the  training  given  before  they  started  as  juniors. 
While  expenses  of  all  salesmen  were  paid  by  the  com- 
pany, several  different  plans  were  used  for  the  payment 
of  juniors.  Commonly  they  were  paid  a  fixed  salary 
out  of  the  commissions  earned  in  the  particular  ter- 
ritory, by  the  seniors  under  whom  they  worked. 
So  long  as  his  work  was  sufficiently  effective  to  in- 
crease the  earnings  of  a  senior  beyond  the  amount 
paid,  the  senior  would  be  satisfied.  It  was  customary 
for  this  particular  company  to  pay  the  applicants  a 
salary  during  the  period  of  the  training  school  (a 
month  or  six  weeks)  and  to  guarantee  to  pay  the  salary 
of  a  junior  for  the  first  60  days  after  getting  out  into 
the  field.  After  that,  the  senior  salesman  took  care  of  it. 
Mr.  Humphrey  also  learned  that  the  J.  B.  Drew 
Company  of  New  York  City,  which  was  engaged  in 
wholesaling  a  broad  line  of  dry-goods  with  a  national 
distribution,  also  employed  junior  salesmen.  The 
senior  salesmen  of  this  company  were  on  a  straight 
commission  basis  with  a  definitely  defined  territory. 
Each  salesman  was  permitted  to  hire  an  assistant  or 
junior  who  was  responsible  to  him,  though  the  company 
exercised  a  control  over  junior  salesmen  by  requiring  a 
weekly  report.  Compensation  of  juniors  rested  en- 
tirely with  the  senior  salesmen. 

Question 
Should  Mr.   Humphrey  have   adopted   the  use   of 
junior  salesmen? 


7S  TKohLMMS   IN  SALI-IS  M ANACiKMENT 

I'komuo.m  ;{() 
Jon  Analysis 

To  facilitalc  i)i()iii|)t  and  efficient  placement  of 
specialists  and  skilled  men  in  army  duties  where  each 
man's  knowledge  and  al)ility  would  be  immediately 
most  ("fTective,  a  manual  of  trade  specifications  was 
prepared  by  military  officers  and  various  civilian 
assistants  definiiif!;  carefully  the  duties  of  specialists 
and  skilled  tradesmen  reciuired  by  the  army  in  its 
various  technical  branches.  Each  definition  included, 
first,  the  duties  to  be  performed;  second,  the  (jualifica- 
tions  of  a  well-trained,  high-grade  man  who  could  do 
this  work;  and  third,  the  nearest  equivalent  for  sub- 
stitute occupations  to  be  drawn  upon  as  a  source  of 
supply  if  necessary.  The  specifications  described  the 
ideal  man  from  the  army  standpoint.  It  is  not  ex- 
pected that  all  the  qualifications  named  will  be  found 
in  each  man.  Following  are  several  examples  of 
specifications:* 

Kncixkku,  Commercial,  Tp:chn'ic.\i> 


Duties 

1.  Organizinji,  siiiiplifyiiig  and  stiiiKlaidizing  coiiiiiicrcial,  in- 
dustrial or  administrative  work. 


(Qualifications 

2.  Must  be  a  tliorough  engineer  by  training  and  habit  of 
thought,  familiar  with  commercial  problems  and  able  to 
apply  engineering  methods  to  their  solution. 
Must  have  had  experience  analj'zing  business  conditions 
and  in  the  perfection  of  methods,  sj-stems  or  organizations 
to  solve  difficulties  encountered  in  operation.  Able  to 
examine,  study  and  solve  industrial  enterprises  for  the  pur- 
pose of  simplification  or  imjirovement  in  proces.ses  of  admin- 
istration. 

Should  be  able  to  lay  out,  direct  and  analyze  clerical  labor 
and  should  be  thoroughly  familiar  with  the  fundamentals  of 
organizations. 

Should  be  full}'  posted  on  various  commercial  mechanical 
devices. 


Substitute  0(HMH)ation.-< 

3.  Engineering  executive,   practical- efficiency  engineer,  office 
executive. 


*Taken  from  Tnitlc  SiKciJicdtidiis  uml  Iitdcr.  I'liHcd  SlaU'n  Ariini. 


SALES  ORGANIZATION  79 

Civil  Engineer 

Duties 

1.  Planning,  designing  and  supervising  all  classes  of  general 
construction  operations. 

(Qualifications 

2.  Must  be  a  technical  graduate  with  a  broad,  practical  expe- 
rience in  the  various  branches  of  civil  engineering. 
Must  be  thoroughly  familiar  with  the  mathematical  and 
mechanical  principles  and  engineering  features  of  designs, 
construction  or  operation  in  connection  with  land  sur- 
veying, structuial,  bridge  or  building  work  of  any  kind, 
highway  construction,  hydraulic  developments,  mimicipal 
engineering  in  connection,  with  water-works,  drainage  and 
sewerage,  railroad  survey  and  construction,  harbor  and 
canals  and  dams  construction,  such  as  wharfs,  piers,  exca- 
vation and  dredging. 

Must  be  thoroughly  familiar  with  the  use  of  all  types  and 
classes  of  construction  machinery  used  in  civil  engineering 
developments,  such  as  cranes,  hoists,  derricks,  shovels, 
hydraulic  dredges,  pumps,  excavators,  concrete  mixers  and 
distributors. 

Must  be  thoroughly  familiar  with  all  materials  us(>d  in 
construction  work  and  capable  of  i)reparing  specifications 
and  contracts  for  materials  or  equipments  of  any  Ivind  in- 
volved in  such  classes  of  work. 

Substitute  Occupations 

3.  Hydraulic  engineer,  municipal  engineer,  structural  engineer, 
highway  engineer,  architectural  engineer,  mechanical  engi- 
neer, surveyor. 

Accountant,   Cost 

Duties 

1.  Installing  and  maintaining  an  efficient  and  adecjuate  sys- 
tem of  cost  records  in  connection  with  manufacturing  of 
any  kind. 

Qualifications 

2.  Must  be  thorouglily  experienced  and  capable  of  working  out 
the  details  and  accurately  recording  various  operations  of 
manufacturing  costs. 

Must  be  capable  of  preparing  printed  forms  of  various  kinds 
to  record  all  items  entering  into  manufacturing  cost,  such  as 
operation  cards  or  tickets,  work  and  insjx^ction  cards  show- 
ing items  of  material,  scrap,  labor,  and  overhead  or  burden, 
and  forms  showing  total  accumulated  costs. 
Must  be  capable  of  supervising  all  clerical  help  in  compiling, 
computing,  transferring  and  filing  in  coimection  with  all 
records,  cards  or  tickets. 

Must  be  capable  of  estimating  production  co.st  and  pre- 
paring budget  reports. 

Substitute  Occupations 

3.  Accountant  general,  engineer,  executive  office,  cost  clerk  of 
large  plant. 


so 


THOHLKMS  IN  SALES  MANAGEMENT 


HooKKKKI'KIt 


Duties 

1.  Keeping  coiiiiricrci.'il,  fiicfory  or  ficnonil  .'iccoiiiit  hnoka  of 
any  sort . 

Qualifu'iitioris 

2.  Must  he  a  first -class  jfcucral  bookkeeper,  exix-riencod  in 
single  and  (loul)le  entry,  day  hook,  stock  hook,  posting  and 
halaneinp;.  Must  he  familiar  with  modern  hook  or  loose- 
leaf  and  card  hookkeepiiifi,  and  preferahly  ahle  to  operate 
Hurrouglis  or  other  adiiiiiK  or  hookkeepiiif^  rnachino  S3'stcm. 
Must  l)e  cajiahle  of  acting  as  head  bookkeeper  in  charge  of 
posting  and  balancing  general  shop  books  where  modern 
methods  arc  em|)loyed. 

Should  have  had  experience  as  shop  or  factory  bookkeeper 
with  an  imhistrial  machine  or  automobile  factory. 

Substitute  (Acui)ation> 

3.  Accountant,  auditor,  clerk. 


Clkkk,  (Iknkral  Office 

Duties 

1.  General  clerical  work  and  office  detail. 

Qualifications 

2.  Must  be  an  experienced  office  clerk,  capable  of  handling 
general  correspondence  and  performing  clerical  work,  tab- 
ulating, invoicing,  filing,  card  index  work,  preparing  state- 
ments, and  should  have  some  knowledge  of  simple  book- 
keeping and  be  able  to  make  out  payrolls. 

Must  be  familiar  %\-ith  and  possess  a  good  knowledge  of  shop 
or  factory  office  methods,  the  forms  used  for  handling  of  the 
stores,  requisitions,  material  sheets,  cost  sheet,  receiving, 
shipping,  inventory  and  billing,  and  also  be  familiar  with 
the  particular  industrial  or  engineering  terms  used. 
Ability  to  operate  a  tj'pewTiter  and  adding  machine,  to 
some  extent  desirable.  Should  have  had  similar  expe- 
rience in  office  of  any  industrial  plant,  insurance  office  or 
with  contractors,  or  engineers,  or  railroad  company. 


Substitute  Occupations 

3.  Industrial  clerk,  commercial  clerk,  railroad  clerk,  clerk. 


SALES  ORGANIZATION  81 

Concrete  Foreman 


Duties 

1.  General  supervision  of  concrete  operations  of  any  character 
and  of  any  size. 


Qualifications 

2.  Must  be  thorouslily  experienced  as  a  general  concrete  fore- 
man or  boss  anci  able  to  supervise  large  concrete  operations. 
Should  be  particularly  familiar  with  the  mixing  and  placing 
of  concrete  on  various  kinds  of  work. 

Must  be  familiar  with  mass,  cyclopean  or  detail  concrete 
form  work  for  foundations,  piers,  abutments,  retaining  walls 
and  reinforced  work,  such  as  walls,  columns,  beams  and 
floors,  culverts,  arches,  viaducts,  gun  foundations,  tanks, 
reservoirs  and  sewers. 

Must  understand  placing,  ramming,  spading  and  be  a  good 
facer  and  able  to  give  various  finishes  to  concrete  surfaces. 
Must  understand  placing  and  safe  removal  of  forms  and 
reinforcing  of  standard  types. 

Must  understand  the  use  of  steam  or  gasoline  mixers,  hoist- 
ing towers,  hoisting  engines,  chutes,  distributing  systems 
and  be  experienced  with  selection  and  proportioning  of 
concrete  material  for  different  classes  of  work. 
Should  be  skilled  in  the  use  of  devices  for  protection  against 
freezing  and  know-  how  and  when  to  remove  props  and 
forms,  and  able  to  proceed  continously  under  unfavorable 
conditions. 

Should  have  had  like  experience  on  railway,  building  or 
general  construction,  or  a  general  foreman  on  large  masonry 
or  brick  operation. 


Substitute  Occupations 

3.  General  concrete  contractor,  construction  foreman,  concrete 
boss. 


Questions 
1.  Would  it  he  practical  to  apply  the  same  type  of 
analysis  to  positions  in  the  sales  organizations? 


82         PROBT-KMS  I\  SAM^S  MANAGEMENT 

Selection  ov  Salesmen  by  Interview* 

The  Ajiiorican  Toharro  Company  employed  in  1915 
about  1,400  salesmen.  Tlu'se  were  selected  by  the 
district  managers,  following  a  personal  interview,  from 
prospects  recommended  by  customers  or  others. 
Advertising  for  prosjiects  was  not  used.  In  prosecuting 
his  studies  of  psychological  tests  and  their  applica- 
tion to  the  selection  of  salesmen,  Professor  Walter  Dill 
Scott  had  8  district  managers  of  this  company  meet 
in  one  city  to  interview  independently  and  successively 
29  applicants  for  the  position  of  salesman,  of  whom  15 
men  were  to  be  chosen.  Each  district  manager  was 
asked  to  use  his  usual  method  of  interviewing  and 
ranking  the  men.  In  the  following  table  of  results, 
the  Roman  numerals  indicate  the  district  managers. 
No.  1  is  a  division  manager  in  charge  of  the  other  7 
district  managers.  Applicants  are  designated  by 
letters  A  to  CC\** 


Average 

1 

II 

111   IV 

\' 

VI  VII 

VIII 

A     4 

18 

9 

5   21 

2. 

5 

2.5  3 

11 

B     5 

8 

3 

11.5  3 

2. 

5 

14.5  26 

5 

C     7 

4 

3 

11.5  6 

15 

20   15 

4 

D    11.5 

19 

15 

7   21 

9 

11    3 

17 

E     1 

2 

3 

19  •  2 

23 

1    3 

2.5 

F    14 

1 

9 

13.5  24.5 

9 

2.5  22 

24 

G    15 

20.5 

9 

13.5  16.5 

12 

8   27 

2.5 

H    10 

9 

9 

24.5  8 

6 

8   18 

15.5 

1  3       28         3         6         4.5  12         4.5     3         9 

J  2         7         3         4         4.5  23       12.5     6         6.5 

*Takeii  from  Fruiters'  Jul:,  T'chruary  17,  1916. 

**The  most  notable  work  in  ai)i)lyiiip;  psycliological  tests  to  selection 
of  sales  force  has  been  done  by  the  Bur(\au  of  Personnel  Research 
of  the  Carnepie  Institute  of  Technology  in  coiiiieftion  with  insurance 
salesmen.  Recent  developments  of  |isychological  tests  as  used  in 
the  United  States  Army  are  foimd  in  Yoakum  and  Yerkes,  Army 
Mental  Tests.  Also  The  Personnel  System  of  the  United  States  Army, 
Vol.  I.,  pp.  115-162.  VVTiipple,  Manual  of  Mental  and  Physical  Tests, 
and  Pintner  and  Patterson,  .4  Scale  of  Performance  Tests,  may  be 
consulted. 


SALES  ORGANIZATION  83 


Average 

I 

II 

III 

IV 

\' 

VI 

VII 

[     VIII 

K 

U) 

15 

24 

21 

13 

23 

25 

11 

6.5 

L 

6 

11 

9 

10 

1 

12 

12.5 

19 

1 

M 

.  9 

26 

15 

1 

8 

9 

16.5 

3 

15.5 

N 

21 

13 

24 

17 

26 

23 

8 

10 

26.5 

0 

1.5 

14 

9 

8. 

5 

21 

2. 

5  8 

17 

22 

P 

24 

16 

26.5 

24. 

5 

10.5 

23 

25 

20 

13 

Q 

13 

3 

20 

8. 

5 

13 

15 

20 

13 

11 

R 

18 

28 

20 

24. 

5 

16.5 

2. 

5  16.5 

7. 

5  22 

S 

26 

24 

15 

18 

28 

23 

14.5 

25 

26.5 

T 

22 

20. 

5  9 

20 

16.5 

23 

20 

23. 

5  19 

U 

17 

23 

24 

3 

21 

6 

8 

16 

28.5 

V 

8 

6 

15 

2 

8 

23 

4.5 

12 

14 

W 

16 

10 

29 

15. 

5 

13 

6 

18 

9 

11 

X 

23 

22 

20 

22 

10.5 

23 

25 

7. 

5  22 

Y 

27 

17 

15 

28 

28 

23 

22 

28 

19 

Z 

20 

12 

20 

15. 

5 

24.5 

23 

25 

14 

3 

AA 

25 

5 

20 

24. 

5 

21.5 

15 

29 

21 

25 

BB 

28 

28 

26.5 

29 

16.5 

23 

23 

29 

19 

CC 

29 

25 

28 

27 

28 

23 

25 

23. 

5  28.5 

Correlation  with  Interviewers: 

.70     .41     .76     .73     .70     .47     .74     .55     .65 

Questions 

1.  What  conclusions  are  to  be  drawn  from  the  re- 
sults? 

2.  What  action  should  be  taken  by  the  American 
Tobacco  Company  to  improve  methods  of  selection? 


84  14{UliLEAI8  IN  SALES  MANAGEMENT 

PnonLEM  38 
Sam:smi;n's  Ai'I'LICation  HlaxNKS* 

Tlic  1\.  R.  Vundcrveer  Company  is  a  large  manu- 
facturer of  paints  ;iii(l  \  ariiishes,  with  factories  located  in 
Bri(i^(^p()rt /'omiccticul ,  and  Cliicago.  Its  products  are 
sold  direct  to  retailers,  usually  hardware  dealers,  drug 
stores,  and  exclusive  i)aint  stores.  In  cities  or  towns 
of  10,000  inhabitants  or  less,  exclusive  agencies  are 
granted,  while  in  larger  cities  the  number  of  dealers  to 
whom  the  company  sells  is  strictly  limited  in  order  to 
render  more  effective  the  elaborate  plan  of  cooperation 
with  the  dealer  which  the  Vanderveer  Company  has 
undertaken.  While  the  company  does  not  sell  direct 
to  master  painters  unless  they  maintain  a  retail  shop, 
or  to  any  except  very  large  contractors  or  wholesale 
consumers,  it  carries  on  a  very  active  campaign  to 
induce  these  buyers  to  i)urchase  through  local  dealers. 

Successful  distribution  has  been  attained  and  a  large 
sales  force  is  employed,  but  prior  to  1920  the  sales 
manager  had  used  no  standardized  form  of  application 
blank  or  method  of  selection  of  salesmen.  In  the  early 
part  of  that  year,  L,  W.  Prentiss,  assistant  sales 
manager,  in  charge  of  personnel,  undertook  the  prob- 
lem of  working  up  a  satisfactory  method  of  selection. 
One  of  the  first  points  of  attack  was  the  formulation  of 
a  salesman's  application  blank.  He  wrote  to  other 
manufacturers  asking  for  their  forms,  with  the  idea  of 
selecting  the  most  desirable,  which  he  is  expected  to 
modify  to  fit  his  own  needs.  Among  the  forms  received 
Mr.  Prentiss  finally  chose  the  following  two  as  offering 
the  best  possibilities  of  adaptation. 


*Employment  methods  and  problems  are  discussed  in  Metcalf  and 
Tead,  Personnel  Administration,  and  Shefferinan,  Employment  Methods. 
See  also  Bulletins  of  the  J'ederal  Board  for  Vocational  Education,  Em- 
ployment Management  Series,  1-9;  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  May,  1910.  Problems  Arising  and 
Method  Used  in  Interviewing  Employees,  pp.  208-218.  The  Application 
Form,  pp.  219-222. 


SALES  ORGANIZATION  85 

FORM  A  (Page  1) 

Date 19 

Name  in  full 

Street  Address City Telephone 

Birthplace Nationality Age 

What  are  your  ideas  regarding  compensation 


Physical  Qualifications  General  Qualifications 

1.  Height Married  or  single Children 

2.  Weight Other  dependents 

3.  Complexion Do  you  own  real  estate Value 

4.  Nationality Is  it  free  from  incumbrance 

5.  Any  defect  in:  Have  you  any  loans  or  debts  past  due 

Speech.^ ...     If  so,  particulars 

Hearing To  what  extent  do  you  use  intoxicants 

Sight Member  of  what  lodges  (give  lodge  numbers) 

Feet - - 

Other Are  you  in  good  standing 

6.  Taken  recent   physi-     What  is  your  mihtary  status 

cal  examination    ....     What  insurance  do  you  carry — Life 

7.  For  what  purpose  ....     Health Accident 

8.  Did  you  pass  Have  you  ever  been  bonded What  Amt.. 

9.  What   serious   illness     Name  relatives  in  our  employ 

have  you  had  within -- 

last  five  years.  Are  you  personally  acquainted  with  any  in 

our  employ 

10.  Are    you    wilhng    to     Who 

take  physical  exam. 


(Page  2) 
PARTICULARS  OF  PRESENT  EMPLOYMENT 

Are  you  at  present  employed If  not,  how  long  since  last  steaxly 

work — 

Name  of  present  or  last  employer 

Address City State 

What  is  your  present  or  last  work     Salary  or  commission 

What  territory  do  you  cover How  long  have  you  covered  it 

What  percentage  of  your  time  is  spent  in  working  towns  of  5,000  or 

less ,  cities  between  5,000  and  50,000 Cities  over 

50,000 What  do  you  sell Sales  for  past  year 

What  classes  of  buyers  do  you  call  on 

How  many  accounts  are  you  w^orking How  often  do  you 

see  them 

How  many  months  out  of  the  year  have  you  been  accustomed  to 

traveling 

Could  you  retain  present  position  indefinitely 

Have  you  ever  been  discharged  or  "laid  off" 

For  what  reason 


86  I'KOHJJmMS  in  sales  MANAGEMENT 

rOSITIOXS  inCLD  OTHKH  than  YOl'll  PKESKNT  ONE 


l''r()iii 
Wl.at 
Dati- 


What 
l)at<' 


Nat  lire 

of 
I'ositioii 


Why 

Did  You 

Leave 


Nainc  and 
Address  of 
iMiiplover 


Lino 

of 

Hiisin('> 


N.'t 

Yearly 

Ivuiiinns 


EDUCATION  AND  SELLING  EXPERIENCE 

Were  you  raised  in  city,  town  or  country 

Did  you  graduate  from  high  school Where 

Did  you  attend  college Where When How  long 

At  what  age  did  you  commence  work How  many  years' 

selling  ('x{)crience 

What  study  courses  have  you  completed  since  leaving  school 

Have  you  taken  a  special  sales  training  course  with  any  previous  em- 
ployer  Particulars 

What  territory  are  you  most  familiar  with 

What  other  territories  have  you  covered 

Will  you  accept  any  territory  we  have  vacant 

Are  you  willing  to  travel 

State  preference,  if  any Second  choice 

What  lines,  other  than  your  present  one  have  you  handled 

Any  experience  in  our  line Particulars 

What  classes  of  manufacturers  have  you  sold    

What  classes  of  jobbers  have  you  sold 

What  classes  of  retailers  have  you  sold 

With  what  class  of  trade  arc  you  best  acquainted 

What  classes  of  consumers  have  you  sold  direct 

CHARACTER  REFERENCES— OTHER  THAN  EMPLOYERS 

Name  Business  Address 


(Page  4) 
In  the  space  below  applicant  will  write  a  letter,  briefly  setting  forth 
the  reasons  why  he  desires  a  connection  with  this  house;  why  he  thinks 
he  would  make  a  successful  representative,  and  why  he  unshes  to  change 
his  present  position: 


It  is  understood  and  agreed  that  any  agreement  entered  into  between 
this  Company  and  the  applicant  is  predicated  upon  the  truthfulness  of 
the  statements  herein  contained. 


Signature  of  Applicant 


APPLICANT  IS  NOT  TO  USE  SPACE  BELOW  THIS  LINE 

Bonding  application  filed 

Report , 


SALES  ORGANIZATION  87 

FORM  B 

Date 192 

Application  for  employment  in Department 

To  be  filled  in  by  applicant  in  own  handwriting,  preferably  in  ink. 

Name Address 

Date  of  birth Place  of  birth Nationality 

Height Weight Color  of  hair Color  of  eyes 

To  what  extent  do  you  use  tobacco 

To  what  extent  do  you  use  liquor 

To  what  unions,  fraternal  orders  or  societies  do  you  belong 

What  church  do  you  attend Are  you  married 

Do  you  live  with  wife Do  you  pay  wife  a  regular  salary  from  earn- 
ings  In  what  places  have  you  lived .- 

How  many  dependent  upon  you  for  support 

What  school  and  college  training  have  you  had 

What  are  you  doing  to  improve  this 

In  school,  what  studies  did  you  like  best What  least 

What  do  you  read 

In  reading  the  daily  papers,  what  do  you  read  first 

How   would   you  rate   yourself   on   answers   to   following   questions: 
excellent,  good  or  fair? 

Careful Good  Memory 

Courteous Obedient 

Punctual Orderly 

Accurate Cheerful. 

Industrious Patient , .-. 

Can  you  take  a  joke  on  yourself 

Do  j^ou  make  acquaintances  easily ^ 

Do  you  have  many  intimate  friends 

Where  have  you  worked  last  ten  years 

If  more  than  ten  years  with  last  place,  where  employed  previous  to  that 

Place Position From Until 

Why  did  you  leave -. 

Present  employer 

What  position  do  you  hold  now 

What  are  your  duties  in  your  present  position 

How  long  have  you  held  your  present  position 

What  pay Why  do  you  wish  to  leave 

How  much  time  have  you  lost  in  the  last  five  years  from  work  account 

of  sickness 

What  was  the  nature  of  your  illness 

What  kind  of  work  do  you  like  best What  kind  least 

What  pay  do  you  expect  to  receive 

What,  besides  pay,  is  important  to  you  in  a  job 

Do  you  thinlv  you  can  handle  men 

If  so,  on  what  do  you  base  your  opinion 

According  to  observation,  by  what  method  is  advancement  usuallj' 

won 

Through  what  means  do  you  hope  to  secure  advancement 

What  experience  or  training  have  you  that  in  your  opinion  would  tend 
to  fit  you  for  the  position  sought  (answer  tliio  in  detail) 


88  PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

\.  Which  of  these  appHcati(jii  blanks  was  best 
fitted  to  serve  as  a  basis  for  nuxh'liiifi;  a  form  for  the 
Vanderveer  Company? 

2.  What  changes  would  you  suggest? 


Problem  39 
Selection  of  Salesmen — Rating  Scale 

The  rating  scale  is  a  means  for  judging  and  evaluat- 
ing more  accuratcl}'  than  is  ordinarily  possible  the 
essential  personal  qualities  necessary  for  a  given 
position  or  type  of  work.  Preparing  a  rating  scale 
and  devising  special  psychological  tests  for  a  given 
type  of  work  necessitates,  first  of  all,  the  making  of 
a  job  analysis  or  job  description.  Without  such 
description,  it  is,  of  course,  impossible  to  make  more 
than  general  tests  of  intelligence  or  to  connect  the 
rating  scale  with  the  particular  job  in  other  than  a  loose 
fashion.  While  a  job  anal^'sis  may  be  prepared  by 
personal  contact  and  study,  a  more  reliable  method 
consists  in  having  several  persons  prepare  job  analyses 
from  which  a  composite  may  be  made. 

The  following  is  a  rating  scale  for  judging  certain 
types  of  salesmen.  It  has  been  used  particularly  in 
selection  of  salesmen  for  a  grocery  specialty.* 

•The  scale  has  been  prepared  by  Professor  Daniel  M.  Starch  of 
the  Graduate  School  of  Business  Administration  of  Harvard  University. 


SALES  ORGANIZAITON 


89 


QUALITIES 

1.  Appearance    and    Man- 

Strong 

Favor- 

Indif- 

Offen- 

ner.    Consider  how  he 

Person- 

able 

ferent 

sive 

impresses  the  trade  in 

ality 

Weak 

his  field  by  appearance 

and  mannner. 
2.  Sales  Ingenuity.     Con- 

^ Very 

sider  his  success  in  siz- 

Success- 

Capable 

Medio- 

Unsuc- 

ing up  a  sales  situation 

ful 

cre 

cessful 

and   in   presenting   the 

company's   policy  with 

tact,  clearness  and  force. 

3.  Industry.    Consider  his 

Very 

Indus- 

Imhf-  . 

Lazy 

energy  and  application 

Ener- 

trious 

ferent 

to  the  duties  of  his  work 

getic 

•  day  in  and  day  out. 
4.  Reliability.        Consider 

Abso- 

Consci- 

Care- 

Unre- 

whether he  is  acciu'ate 

lutely 

entious 

less 

liable 

in  statements,  depend- 

Depend- 

able in  money  matters, 

able 

faithful    in    social    re- 

lations. 

5.  Ability    in     Developing 

Develops  Develops 

Neglects  Discour- 

Men.    Consider  his  suc- 

Salesmen 

Salesmen 

Develop- 

ages  and 

cess  in  developing  talent 

of  High 

of  More 

ment  of 

Misin- 

and improving  the  grade 

Cahber. 

than  Or- 

of Sales- 

forms 

of  the  salesmen  through 

dinary 

men 

Salesmen 

arousing  ambition,  cre- 

Abihty 

ating   and   maintaining 

interest  and  imparting 

information. 

Read  carefully  the  definition  of  the  first  quahty.  At  the  right  are 
the  degrees  in  which  a  person  may  possess  this  quality.  Make  a  check 
at  the  point  which,  in  your  opinion,  best  describes  the  person  you 
are  sizing  up. 

Questions 

1.  Prepare  a  rating  scale  similar  to  the  above,  which 
will  aid  in  the  selection  of  traveling  salesmen  for  a  con- 
cern manufacturing  electric  cranes  and  hoists  used  in 
industry  and  shipping.  It  is  customary  to  make  the 
sale  direct  to  consumer,  each  sale  being  the  result  of 
a  series  of  negotiations  between  the  salesman  and  the 
engineering  department  of  the  purchasing  concern. 

2.  What  changes  in  the  rating  scale  would  be 
necessary  to  adapt  it  to  the  selection  of  field  super- 
visors from  salesmen  of  a  wholesale  grocery  concern? 


!M) 


I'KoJiLKMS  IN  SALES  MANAGEMENT 


I'UOMLKM    40 
R.\T1N(;    SCALKH 

A   i)r()iiiiiu'iit    motor  distributor  uses  the  following 
rating  plan,  adapted  fioiii  army  rating  schedules,  for 

the  analysis  of  his  slioj)  foi'ce: 

KATINC;  SCALI-;  FOR  FOREMEN* 

I.  Thade  Ability 

Consider  kind  and  amount  of  trade  (or  dcpt.) 
oxporionco;  knowledge  of,  and  resourcefulness 
in  using  machines,  tools,  materials,  and  trade 
methods. 

II.  Ability  to  Plan  and  Supervise. 
Consider  ability  to  maintain  standard  (juality 

work;  to  place  help  where  thej'  can  do  the  best 
work;  to  plan  ahead  so  as  to  have  materials, 
men  and  tools  ready  to  get  out  orders  on  sched- 
ule time  with  minimum  production  costs  and  to 
keep  a  steady  force. 

III.  Ability  to  Handle  Men. 
Consider  initiative,  decisiveness,  resourceful- 
ness, energ}^  self-control,  and  ability  to  deal 
fairly  with  his  help;  to  earn  their  respect,  good 
will  and  confidence;  to  maintain  just  discipline 
and  a  stable  working  force. 

IV.  Ability  to  Teach. 
Consider  his  ability  to  explain  his  work  clear- 
ly and  thoroughly  to  a  beginner,  to  gain  the 
beginner's  confidence  and  make  him  interested 
in  the  work;  his  success  in  developing  all-round 
men,  bettei'ing  men  of  lower  grades,  and  in- 
creasing generally  the  knowledge  of  the  help 
under  him  and  their  skill. 

V.  General  Value  to  the  Company. 

Consider  his  years  of  service,  loyalty,  ability  Highest  30 
to  understand  and  carry  out  the  company's  High  24 
policies;  orderliness  of  his  department;  readi-     Middle    18 

*This  scale,  taken  from  Prijders'  Ink,  is  based  upon  work  of  the 
Bureau  of  Personnel  Research  of  the  Carnegie  Institute  of  Technology. 
The  use  of  rating  scales  in  the  armj'  as  a  means  of  selecting  commis- 
sioned officers  is  outlined  in  The  Personnel  System  of  the  United  States 
Army,  Vol.  I,  pp.  565-580,  Vol.  II,  pp.  252-275. 


Highest 

High 

Middle 

15 

12 

9 

Low 

6 

Lowest 

3 

Highest  25 
High       20 
Middle    15 

Low 

10 

Lowest 

5 

Highest 

High 

IVliddle 

15 

12 

9 

Low 

6 

Lowest 

3 

Highest 

High 

Middle 

15 

12 

9 

Low 

6 

Lowest 

3 

SALES  ORGANIZATION  91 

ness  and  ability  to  cooperate  with  other  depart-  Low  12 
ments  and  the  management  in  giving  new  ideas  Lowest  6 
and  methods  a  fair  trial. 

The  sum  total  of  the  high  ratings  is  100.  "General 
Value"  comes  first  with  a  rating  of  30;  "Ability  to 
Plan  and  Supervise"  next  with  a  maximum  valuation 
of  25;  ''Trade  Ability/'  "Ability  to  Handle  Men," 
"Ability  to  Teach,"  are  considered  each  worth  15  points. 

Questions 

1.  Does  this  plan  offer  the  general  sales  manager  of 
a  concern  manufactiu'ing  typewriters  any  aid  in  the 
selection  of  district  and  local  managers  from  the  force 
of  salesmen? 

2.  What  changes  would  you  advise  to  make  the  rating 
plan  more  suitable  for  this  purpose? 


Problem  41 
Selection  of  Salesmen 

Mr.  Arthur  Kneeland,  on  January  10,  1920,  accepted 
the  position  of  general  sales  manager  with  the  Kennicut 
Manufacturing  Company.  This  company  produces 
typewriters,  which  are  distributed  through  a  national 
selling  organization.  The  main  sales  office  is  located 
in  New  York,  and  the  company  has  forty  branches 
situated  in  the  larger  cities  of  the  United  States.  The 
selling  policies  and  the  control  of  salesmen  are  central- 
ized in  the  New^  York  office. 

At  the  time  Mr.  Kneeland  entered  the  employ  of 
the  Kennicut  Manufacturing  Company,  there  was  no 
standard  method  of  selecting  salesmen  or  of  rating 
applicants  for  the  sales  force.  In  order  to  find  out  how 
other  concerns  w^ere  handling  this,  Mr.  Kneeland,  on 


\y2  IM^oBLlvMS  I\  SAl.i;s  MANAGEMENT 

Fe))ruarv  1.  wrote  a  ))('rs()iial  letter  to  Mr.  Frank  Som- 
ershy,  who  for  \hv  i)r('('(Mliiii<;  fi\(>  yoars  liad  ])ocn  the 
sales  manager  of  a  coiiip.-iii.N  iiiaiuifacturing  calcu- 
lating niacliincs.  In  liis  lett(>r  Mr.  Kneeland  asked  for 
information  r(>{2;arding  tlie  selection  of  new  salesmen 
and  what  records  Mr.  Somersby  had  found  it  advisable 
to  ke(>p. 

The  followinji-  is  ([uoted  from  Mr.  Somersby's  reply: 

Ahhouj^h  the  (■(■iitral  sales  oflicc  reserves  the  right  to 
pass  on  all  selections  of  men,  we  hold  the  district  managers 
responsible  for  the  actual  selection  in  their  respective  dis- 
tricts. The  management  prefers  to  train  its  salesmen  from 
the  start,  and  in  order  to  ol)tain  men  without  previous 
sales  experience  we  advertise.  Our  method  is  to  insert 
in  the  city  newspapers  a  blind  advertisement  in  which 
emphasis  is  placed  on  previous  education.  While  the  policy 
of  the  com))any  is  i-eflected  in  th(>  fact  that  40^^,  of  its  sales 
force  are  college  men,  we  retiuire  only  a  high  school  educa- 
tion. In  order  to  weed  out  the  impossible,  the  advertise- 
ment states  that  the  applicant  must  reply  by  letter.  We 
usuall.v  find  that  out  of  approximately  every  fifty  who  reply 
to  our  district  managers  that  only  from  six  to  twelve  are 
accepted  for  an  interview. 

Each  applicant  is  looked  upon  as  a  possible  source  of 
investment  of  so  nuicii  of  the  company's  working  capital, 
as  we  always  look  upon  changes  of  personnel  as  costly  to  the 
company.  Naturally,  we  want  an  investment  to  be  per- 
manent and  to  continue  to  earn  and  return  a  profit.  If 
the  profit  is  of  healthy  proportions,  our  task  of  establishing 
a  profit-sharing  contract  between  the  company  and  sales- 
men is  simplified.  The  ideal,  of  course,  is  to  have  both 
parties  to  the  contract  moving  forward  and  satisfied  to 
work  together. 

Each  applicant  is  mentally  charted  ])y  the  interviewer 
as  to  his  character.  Under  the  heading,  character,  we 
include  enthusiasm,  honesty,  dependa])ility,  loyalty,  ver- 
acity, habits,  and  determination.  His  address  is  carefully 
noted  for  such  points  as  gi-anunar,  forcefulness  and  enun- 
ciation. For  his  intelligence,  we  attempt  to  judge  his 
mental  alertness,  observation  and  ability.  We  have  a 
classification  which  we  call  wearing  qualities,  which  include 
his  sympathy,  ability  to  listen,  tact,  cheerfulness,  optimism, 
courtesy,  freedom  from  conceit.  We  of  course  judge  his 
physical  qualities  and  endeavor  to  size  up  his  physique, 
energy,    endurance,    and    general    health.     As    a    pos.sible 


SALES  ORGANIZATION  93 

executive,  the  qualities  of  business  knowledge,  power  to 
concentrate,  memory,  aml)ition,  courage,  breadth  of  view 
and  de(;ision  arc  carefully  watched  out  for. 

After  the  interview  the  impressions  gathered  by  the 
interviewer  are  recorded  on  a  permanent  card.  Each 
applicant  has  an  individual  card  on  which  the  interviewer 
grades  each  item  on  which  he  has  formed  an  opinion.  Our 
rating  scale  is  as  follows: 

Excellent 5 

Good 4 

Fair 3 

Poor 2 

Unsatisfactory,  or  quality  apparently  lacking  1 

In  a  majority  of  cases,  if  the  average  grade  is  fair,  we  give 
the  applicant  a  card  to  fill  out,  either  at  the  office  or  to  take 
away  with  him  to  answer  at  his  leisure.  This  card  is  called 
the  'application  for  position'  card,  and  the  questions  asked 
aside  from  those  of  name,  date,  and  place  of  birth,  are 
listed  under  the  headings  of  previous  employment,  character, 
references  other  than  relatives  or  employers,  education 
and  experience,  characteristics,  business  arithmetic.  We 
place  great  emphasis  on  the  applicant's  correct  answers  to 
the  questions  that  we  ask  under  the  heading  of  'business 
arithmetic'.  In  fact,  in  a  majority  of  cases,  if  the  applicant 
at  the  original  interview  shows  a  natural  aversion  for  math- 
ematics he  is  seldom  given  encouragement.  Our  reason  for 
this  is  that  we  do  not  think  in  our  business  that  it  is  essential 
for  the  ordinary  man  to  have  had  previous  sales  experience 
either  in  the  specialty  field  or  general  sales  experience  of 
any  kind  to  make  good,  but  we  do  consider  it  essential  that 
a  prospective  salesman  have  a  liking  for  arithmetic  in  order 
to  succeed. 

Questions 

1.  Should  Mr.  Kneeland  have  adopted  this  plan? 

2.  If  so,  were  any  changes  necessary? 


91  l'H()in,i;MS   IN  SALKS  M  AXA(  IK.MF.XT 

I'ltOHLKM    4^2 

Ski.kction  ok  Salksmkx 

The  Thompson  Coinptiiiy,  nuinufacturiujj;  tanning 
systems,  ventilatinp;  systems  and  allied  products,  meets 
keen  competition  in  the  motor  and  fan  lines,  but  in 
exhaust  fans  and  \entilating  systems  the  company  has 
the  leadership. 

The  company  does  not  sell  to  retailers,  hut  to  con- 
sumers, such  as  builders  and  engineers,  and  to  jobbers. 
The  majority  of  business  is  done  direct  with  the  con- 
sumer. The  salesmen  are  all  engineers,  sometimes 
selected  from  other  lines  of  industry  and  trained  at 
the  plant  or  secured  from  within  the  plant  in  the 
engineering  department. 

The  company  wishes  to  build  uj)  its  motor  and  fan 
business. 

Questions 

1.  Should  specialty  salesmen  be  hired  for  these 
particular  lines? 

2.  If  so,  should  they  be  engineers,  like  the  salesmen 
for  other  lines? 

3.  What  consideration  should  govern  selection? 


Problem  43 
Selection  of  Salesmen 

A  certain  sales  manager,  in  interviewing  applicants 
for  positions  as  traveling  salesmen  for  a  paint  manu- 
facturing concern,  made  it  a  practice  to  interview  men 
personally  at  30-minute  intervals.  First  of  all,  each 
man  was  given  an  opportunity  to  talk  about  himself; 
he  was  encouraged  to  give  his  life  history,  with  the  idea 
that  as  soon  as  this  was  off  his  mind  he  would  begin 


SALES  ORGANIZATION  95 

to  appear  less  tense  and  more  natural.  The  sales  mana- 
ger then  told  the  applicant  something  of  the  company's 
proposition,  after  which  he  asked  the  following  questions : 

(1)  Why  do  you  think  you  can  sell  our  line  of  paint? 

(2)  What  is  your  theory  of  advertising? 

(3)  What  kind  of  advertising,  in  your  opinion,  is  the 
best  for  the  merchant? 

(4)  What  have  you  done  personally  to  help  move 
merchandise  from  the  retailer's  shelves? 

(5)  Why  should  I  give  you  preference  over  the  200 
other  salesmen  who  are  applying  for  this  position? 

(6)  How  much  do  you  think  you  should  earn  in  this 
job? 

Questions 

1.  What  is  your  opinion  of  the  value  of  these  ques- 
tions in  selecting  salesmen? 

2.  How  would  these  appl}^  in  the  selection  of  sales- 
men for  other  lines  sold  to  retailers? 


Problem  44 
Establishment  of  Branch  Sales  Office 

(a)  A  shoe  concern,  located  at  Brockton,  Massachu- 
setts, selling  high-grade  shoes  direct  to  retailers  and 
selected  customers  and  through  its  own  stores  in  eastern 
cities,  finds  that  its  per  capita  distribution  grows  less 
as  the  distance  from  the  home  office  increases.  The  per 
capita  distribution  in  Illinois  is  very  much  smaller  than 
in  Pennsylvania.  The  proposal  has  been  made  to 
establish  a  branch  office  in  Chicago.  The  president 
of  the  concern  wishes  information  as  to  the  cost  of  a 


\ 


90  PliOBLEMS   !■  '-:MENT 

branch  oflico,  whetlior  i  ccssary  to 

carry  stock,  what  ('(]uipin(  '1  would 

be  required. 

Questioh 

1.  Wliat  (l(H'isi()ii  sliould  be  ma  ' 

2.  How  sliould  iuforniution  be  Sv.  ■    ^h 
to  base  this  decision? 


(b)  The  Albert  Company  of  Cleveland  manufactures 
medium-grade  men's  clothing,  which  sells  at  moderate 
prices  throughout  the  Middle  West.  While  the  com- 
pany has  been  oversold  nearly  every  season  for  the  past 
twent}'  years,  it  feels  that  its  position  is  being  threat- 
ened at  present  by  the  competition  of  Chicago  manu- 
facturers. 

Salesmen  ordinarily  visit  customers  twice  each  year — 
in  the  sprmg  with  samples  of  fall  wear,  in  the  late 
summer  and  early  fall  with  samples  of  spring  styles. 
Generally  the  men  are  out  on  the  road  from  eight  to 
ten  weeks  on  each  trip.  The  result  is  that  for  prac- 
tically half  their  time  they  must  be  utilized  in  the 
factory  or  given  vacations.  Since  payment  is  upon  a 
commission  basis,  it  is  difficult  to  require  their  assis- 
tance in  the  home  office.  In  order  to  get  in  closer  touch 
with  customers  and  to  establish  an  office  to  which 
customers  might  go  for  the  inspection  of  samples  at 
other  times  than  on  the  semi-annual  trips,  it  is  proposed 
that  a  sales  office  be  established  in  Chicago  in  charge  of 
the  man  who  ordinarily  travels  that  territory  and  an 
assistant.  It  is  expected  that  either  he  or  his  assistant 
wull  visit  customers  through  the  territory  at  other  times 
than  on  the  regular  selling  trips,  and  that  increased 
sales  will  compensate  him  for  extra  effort. 

Question 
Should  the  company  establish  a  Chicago  office? 


SALES  ORGANIZATION  97 

Problem  45 
Establishment  of  Branch  Office 

The  Melvin  Lawrence  Company  manufactures  textile 
machinery  of  all  types  necessary  to  outfit  a  complete 
textile  mill.  The  company  was  founded  about  1850, 
and  has  grown  until  it  is  one  of  the  leaders  in  the 
industry.  The  central  executive  and  sales  offices  are 
located  in  Boston.  A  southern  branch  office  is  estab- 
lished in  Charlotte,  North  Carolina,  with  a  small  sub- 
office  at  Greenfield  under  the  direction  of  the  Charlotte 
office.  Greenfield  is  a  large  mill  center  and  many  of 
the  customers  of  the  company  are  located  there. 

Question 
In  view  of  the  fact  that  textile  mills  are  being  estab- 
lished in  the  West  and  Southwest,  should  the  company 
establish  a  western  sales  office? 


Problem  46 
Establishment  of  Branch  Warehouse 

(a)  The  Leighton  Rubber  Company,  manufacturing 
tires  and  rubber  footwear,  has  a  branch  for  its  tire 
business  located  in  Birmingham,  Alabama.  This  con- 
stitutes a  distributing  point  for  southern  territory.  The 
branch  does  a  business  of  approximately  $75,000  a 
month  with  a  gross  profit  of  17%,  from  which  is  to  be 
deducted  the  discount  expense  of  6%,  sales  expense  of 
5/^%,  and  branch  expenses  (including  all  other 
expenses)  of  53^2  P^r  cent. 

The  manager  of  the  branch  has  asked  that  the  com- 
pany establish  a  warehouse  or  sub-stock-station  in 
North  Carolina.  The  business  in  North  Carolina  runs 
up  to  $5,000  per  month,  but  is  curtailed  because  the 
North  Carolina  trade  desires  better  service  than  the 


9<s  I'HOBLKMS  IN  SALKS  MANAGEMENT 

Birnuiighani  oflicr  cun  ^\\o..  The  management  esti- 
mates that,  if  a  sub-station  is  established  to  give  ship- 
ping service  onl}',  the  North  CaroHna  business  can  be 
increased  to  $15,000  a  month. 

Questions 

1.  Should  the  sub-station  be  established? 

2.  If  so,  in  what  city  should  it  be  located? 

3.  What  additional  expense  would  be  necessary  in 
setting  up  such  a  sub-station,  provided  the  station  only 
shows  and  ships  stock,  while  the  bookkeeping  is  done 
at  the  branch? 

4.  What  effect  would  it  have  on  the  figures  of  the 
Birmingham  office? 


(6)  This  company  finds  it  necessary  to  establish  a 
sales  office  and  warehouse  for  footwear  and  tires  in 
New  York  City.  The  jobbing  district  for  footwear  is 
located  many  miles  away  from  the  tire  wholesale  center, 
which  is  around  57th  Street.  The  problem  is  confront- 
ing the  company  as  to  whether  a  combined  warehouse 
for  tires  and  footwear  should  be  established,  whether 
the  location  chosen  should  be  that  of  the  tire  center,  the 
footwear  center,  or  elsewhere.  The  alternative  is  the 
es'tablishment  of  two  sales  offices  and  warehouses,  each 
in  its  appropriate  center,  with  the  additional  cost 
thus  involved. 

Question 

What  should  be  done? 


SALES  ORGANIZATION  99 

Problem  47 
Branch  Organization 

In  September,  1920,  the  Ajax  National  Bank  had  two 
accounts  on  its  books,  of  rubber  companies  that  were 
being  reorganized.  John  Fleming,  one  of  the  vice- 
presidents,  was  on  both  reorganization  committees  and 
upon  investigating  the  branch  organizations  of  these 
two  companies  found  two  distinct  methods  existed. 
One  of  the  companies,  the  Johnsville  Manufacturing 
Company,  produced  rubber  tires  and  footwear,  and 
conducted  its  branches  as  independent  organizations. 
The  manager  of  each  branch  house  hired  his  own  sales- 
men, laid  out  their  territories,  made  arrangements  for 
remuneration  and  expenses,  and  was  entirely  respon- 
sible for  their  conduct  and  efficiency.  Credits  were 
handled  by  a  branch  manager  attached  to  each  branch. 
Accounting,  bookkeeping,  stock-taking,  and  distribu- 
tion were  all  handled  independently,  the  only  limitation 
having  been  that  in  the  broader  policies  there  should 
be  no  conflict  with  the  central  organization.  None  of 
the  records  kept  by  the  managers  of  branches  were 
brought  into  the  main  office,  with  the  exception  of  the 
amount  of  total  sales  and  certain  general  information. 

The  other  company,  the  Mills  Manufacturing  Com- 
pany, producing  the  same  products,  gave  its  branch 
managers  entire  charge  of  personnel;  they  were  made 
responsible  for  sales  campaigns  developed  by  the  com- 
pany, had  entire  charge  of  records  and  accounts,  credits 
and  collections,  stocks  and  merchandise,  but  kept 
records  in  exact  accordance  with  systems  furnished  by 
the  central  office.  The  re(}uired  reports  gave  the  main 
office  practically  all  the  important  information  collected 
by  the  branch  managers.  In  each  branch  the  salesmen 
reported  to  the  manager;  likewise,  the  chief  clerks  who 
were  in  charge  of  the  persons  performing  the  account- 
ing, billing,  credits  and  collections,  receiving  and  ship- 
ping orders,  stock  records,  and  adjustment  functions. 
Depending  upon  the  size  of  the  branch,  these  functions 
were  combined  or  assigned  to  separate  individuals. 
There  was  no  absolute  uniformity  between  branches;  in 


100       PROBLEMS  IN  SALES  MANAGEMENT 

some  cases,  the  credit  nianaf:;er  reported  directly  to  the 
branch  manager  and  in  other  cases  through  the  chief 
clerk.  Separate  branch  organizations  were  maintained 
for  tire  and  for  footwear,  the  general  plan  of  organiza- 
tion being  the  same. 

Questions 

1.  Should  Mr.  Fleming  suggest  that  the  branch 
organizations  of  both  (•oni})anies  follow  similar  standard 
practices?  Should  the  branch  managers  be  responsible 
for  more  than  the  handling  of  the  sales  force? 

2.  If  so,  to  what  extent  should  the  functions  of 
handling  credits  and  sales  promotion  be  delegated? 


Problem  48 
Field  Organization 

The  following  is  an  extract  from  the  sales  manual  of 
a  large  company  manufacturing  electrical  equipment: 

FIELD  ORGANIZATION 

General 

(a)  There  are  three  kinds  of  offices  in  the  Sales  Depart- 
ment's field  organization,  as  follows: 

(1)  District  office  in  charge  of  a  District  Manager. 
The  District  Office  controls  all  Branch  and  Sub- 
Offices  in  its  territory. 

(2)  Branch  Office.  This  is  an  office  from  which  several 
men  travel  and,  as  a  rule,  there  is  a  Branch  Man- 
ager in  charge. 

(3)  Sub-Office.  This  is  the  headquarters  for  one  or 
two  men  who  travel  from  that  particular  center. 
No  titles  are  given  to  representatives  attached  to 
sub-offices  and  there  is  no  Branch  Manager  in 
charge. 


SALES  ORGANIZATION  101 

(b)  The  following  titles  are  given  where  applicable: 

District  Manager. 

Acting  District  Manager. 

Assistant  District  Manager. 

Assistant  to  District  Manager 

Branch  Manager. 

Manager  Supply  Division. 

Manager  Kail  way  Division. 

Manager  Power  Division. 

Manager  Service  Division. 

Manager  Automotive  Equii)inent  Division. 

(c)  Offices,  personnel  and  territorial  divisions  are  given 
complete  in  another  section. 

In  order  to  make  proper  comparisons  and  studies  in  refer- 
ence to  the  conduct  of  our  business  throughout  the  United 
States,  it  is  deemed  advisable  to  group  the  offices  as  follows: 

Group  A  Grony  B  Group  C 

Denver  Boston  Atlanta 

Los  Angeles  Chicago  Buffalo 

San  Francisco  New  York  Cincinnati 

Seattle  Philadelphia  Detroit 

Pittsburgh  St.  Louis 
*Washington 

Duties  of  District  Manager 
(a)  To  be  responsible  for  the  character  of  our  relations 
with  the  larger  interests  in  his  district  and,  in  general, 
responsible  for  the  character  of  the  service  rendered  by  the 
Company  in  his  district;  insofar  as  it  is  in  his  control;  and 
where  bad  service  is  rendered  due  to  the  shortcomings  of 
some  other  department,  to  make  proper  representation  in 
such  cases  to  the  interested  department  managers  and 
proper  corrections  in  service  be  made.  Settlement  of  all 
disputes  with  customers  should  be  in  district  manager's 
hands,  including  approval  of  service  department  charges. 
He  should  know  all  of  the  important  railway  and  central 
station  men  and  the  heads  of  the  most  important  industrial 
establishments  in  his  territor}',  and  all  of  the  jobbers  and 
important  resale  men.  He  should  also  have  first-hand 
knowledge  of  the  larger  cities  and  towns  in  his  territory. 
This  knowledge  of  men  and  places  is  necessary  in  order  that 
he  may  be  able  to  help  salesmen  in  important  negotiations 
and  also  that  he  mixy  be  able  to  judge  salesmen  and  their 
work  by  knowing  thoroughly  the  field  in  which  they  are 
working. 

*Headquarters  Office,  U.  S.  Government  Business.  • 


102        I'HOBLEMS  IN  SALES  MANAGEMENT 

(6)  To  supervise  the  work  of  division  inanaKors,  includ- 
ing the  manager  of  the  service  division,  and  of  all  assistants, 
branch  inana^eis  and  others  to  whom  special  duties  may  be 
delegated,  and  to  be  responsil)le  for  the  character  of  their 
work. 

(c)  To  be  responsible  for  the  character  of  the  work  done 
by  the  clerical  and  other  non-selling;  divisions  of  the  district, 
branch  and  sub-offices. 

(d)  To  be  responsil)le  for  the  condition  of  the  district 
warehouse  and  the  condition  of  its  contents  and,  through 
division  managers,  for  the  suitability  of  such  district  stock 
in  items  and  (juantities  within  the  aggregate  value  set  by 
the  Company,  to  take  care  of  the  trade  in  the  district. 

(e)  To  assist  and  supervise  the  work  of  the  division 
manager  in  prescribing  lists  of  customers  for  each  salesman. 

(f)  To  be  responsible  for  the  expenses  of  his  office  and 
of  the  force  of  employees  under  his  direction. 

(g)  To  be  responsible  for  the  personnel  of  his  sales  force 
and  for  the  employment  of  the  proper  number  of  competent 
salesmen  to  sell  all  lines  of  product,  give  good  service  to  all 
customers  and  properly  develop  the  full  possibilities  of  his 
district. 

(h)  To  keep  generally  informed  so  as  to  have  a  good 
general  knowledge  of  the  Company's  product. 

(i)  To  study  reports  of  salesmen  and  division  managers 
so  as  to  know  the  total  demand  of  his  district  for  the  Com- 
pany's products, 

(j)  To  supervise  the  work  of  division  managers  in  the 
work  of  developing  demand. 

(k)  To  supervise  the  work  of  division  managers  in  the 
finding  of  new  customers  and  prospects. 

(l)  To  keep  posted  on  the  activities  of  competitors. 

(w)  To  supervise  the  work  of  division  managers  and 
salesmen  in  connection  with  lost  and  abandoned  business 
reports. 

(n)  To  require  and  maintain  discipline  and  compliance 
with  sales  manual;  to  be  responsible  for  the  conduct  of 
the  men  under  him,  in  order  to  see  that  they  are  creditable 
representatives  of  the  Company. 

(o)  To  be  responsible  for  the  maintenance  of  prices  by 
division  managers  and  salesmen  and  to  be  responsible  for 
profit  only  w'hen  the  making  of  prices  is  in  special  cases 
delegated  to  him  by  headquarters  departments  at  Chicago. 


SALES  ORGANIZATION  103 

(p)  To  be  responsible  for  the  utmost  coordination 
between  divisions  in  his  office  to  insure  the  maximum  selling 
results  and  to  see  that  every  resource  of  his  office  is  used 
regardless  of  division  lines.  To  coordinate  the  work  of  his 
office  with  that  of  other  district  offices  and  with  that  of 
headquarters  departments  to  the  end  that  the  maximum 
degree  of  complementary  effort  is  secured. 

(q)  To  supervise  the  work  of  division  managers  and 
salesmen  in  connection  with  reports  on  the  financial  condi- 
tion of  customers. 

(r)  To  supervise  the  work  of  division  managers  and 
salesmen  in  connection  with  reporting  demands  of  the  trade 
for  new  products. 

(s)  To  supervise  the  work  of  his  force  in  connection 
with  the  study  of  customer's  requirements  and  the  sugges- 
tion of  improvements  in  our  products. 

(t)  To  obtain  the  maximum  local  lienefit  from  the 
Company's  advertising  of  all  kinds. 

Questions 
Prepare  a  similar  statement  of  duties  of: 

(a)  Division    managers  who   are  responsible   for 
sales  activities  in  a  single  line. 

(b)  Salesmen. 


Problem  49 
Branch  Organization 

The  establishment  of  branch  sales  offices  is  a  prob- 
lem which  confronts  many  of  the  larger  companies. 
Branch  organizations  are  very  frequently  unsuccessful ; 
that  is,  the  selling  cost  through  branch  organization  is 
extremely  high,  particularly  in  cases  where  the  volume 
of  sales  in  a  particular  district  has  not  increased  as 
anticipated  when  the  branch  was  established.     Where 


104       PROBLEMS  IN  SALES  MANAGEMENT 

branches  are  used  to  supplement  sales  effort,  to  provide 
headquarters  for  decentralized  direction  of  salesmen, 
and  possibly  direction  of  stock  to  be  held  for  prompt 
shipment,  there  may  be  ample  justification  for  their 
estal)lishmcnt.  Only  too  frequently,  dissatisfaction 
with  sales  in  a  particular  district  leads  the  sales  manager 
to  the  conclusion  that  a  branch  sales  office  is  necessary. 
It  is  rarely  possible  to  determine  whether  the  increased 
selling  cost  will  be  spread  over  a  correspondingly  in- 
creased volume  of  sales.  In  export  selling  the  practice 
is  more  conservative  with  regard  to  the  establishment 
of  sales  branches.  The  cost  is  a  matter  which  cannot 
be  overlooked,  and  it  is  customary  to  weigh  the  possi- 
bilities much  more  carefully;  in  fact,  not  to  establish  a 
branch  office  until  compelled  l^y  volume  of  sales  and 
necessity  of  decentralization.  The  same  rule,  which  is 
a  safe  one,  may  be  followed  in  establishing  domestic 
branch  offices. 

In  the  establishment  of  branch  offices,  problems  of 
organization  immediately  arise.  One  of  the  usual  func- 
tions of  the  branch  manager  is  the  direction  of  the 
salesmen  in  the  tenitory  served  by  the  branch.  A 
prominent  manufacturer  of  motor  trucks,  with  19 
branch  offices,  delegates  to  the  branch  manager  the 
entire  responsibility  of  hiring,  firing,  and  training  of 
salesmen. 

Another  company,  manufacturing  tires  and  other 
rubber  goods,  formerly  permitted  branch  managers  to 
employ  their  salesmen.  They  declared  that  this  resulted 
in  lack  of  uniformity  in  the  organization;  and,  as  a 
consequence,  adopted  a  standard  method  of  employ- 
ment allowing  branch  managers  to  participate  in  the 
employment  of  salesmen,  although  it  is  conducted  under 
the  direction  of  the  employment  division  of  the  Sales 
Personnel  Department.  In  other  words,  the  employ- 
ment division  has  to  approve  the  application  before  the 
branch  manager  can  hire  the  man.  The  education 
division  has  charge  of  the  sales  school,  undertaking  to 
teach  each  man  and  pass  upon  him  during  his  period 
of  training. 


SALES  ORGANIZATION  105 

A  collar  manufacturer's  sales  organization  is  headed 
by  a  director  of  sales.  Under  him  are  eight  sales  man- 
agers in  charge  of  the  United  States  sales  districts — 
New  York,  Philadelphia,  Chicago,  Boston,  Cleveland, 
Toronto,  San  Francisco,  and  Los  Angeles.  These  men 
are  located  at  the  branch  offices.  Under  the  district 
sales  manager  are  the  salesmen  in  each  territory.  No 
salesmen  are  hired  at  the  main  office.  Each  district 
sales  manager  hires  and  trains  his  own  men. 

Other  companies  adopt  the  plan  of  making  their 
branches  practically  independent,  subject  to  the  main 
organization  only  in  matters  of  general  policy.  This 
is  true  of  certain  automobile  companies  and  it  is  based 
upon  the  theory  that,  if  the  branch  manager  is  practi- 
cally in  the  position  of  manager  of  his  business,  he  will 
exercise  more  initiative  and  energy  in  getting  business. 

The  Rogers  Company,  of  New  York,  is  one  of  the 
large  manufacturers  and  distributors  of  heat  and  radi- 
ation systems.  Because  of  its  adoption  of  progressive 
sales  methods  and  its  extensive  advertising  during  the 
last  25  years,  the  company  has  experienced  a  rapid 
growth  until  there  were,  in  1919,  over  40  branch 
offices  and  sub-offices  in  the  organization.  At  that 
time  the  branch  managers  were  subordinate  to  terri- 
torial sales  managers  located  in  the  central  office. 
The  country  was  divided  into  three  divisions,  with  a 
territorial  manager  over  each.  These  territorial  man- 
agers had  control  and  direction  in  their  respective  dis- 
tricts of  branch  managers,  who,  in  turn  made  periodic 
reports  to  them.  The  territorial  sales  manager  conse- 
quently reported  to  the  general  sales  manager  of  the 
company. 

At  the  time,  all  accounting,  billing,  credit,  and  col- 
lection work  was  centralized  in  the  New  York  office; 
the  branches  were  simply  selling  and  warehousing 
offices.  The  branch  manager  had  the  power  of  hiring 
and  firing  salesmen,  and  exercising  control  over  them, 
but  had  to  make  detailed  and  elaborate  reports  on 
their  work  to  the  territorial  sales  manager,  who  was 
over  him. 


i(k;      problems  in  sales  management 

The  district  sales  inanaj2;er  ami  branch  manager  of 
this  company  were,  in  almost  all  cases,  superior  sales- 
men wlio  had  l)e(Mi  i)r()ni()ted  to  these  positions.  At  the 
time  stated  the  general  sales  manager,  after  much 
thought,  was  convinced  that  his  branch  manager  and 
territorial  manager  had  become  desk  men  to  too  large 
a  degn^e;  their  sales  ability  was  not  being  utilized 
through  personal  contact  with  their  selling  forces. 
Practically  their  whole  time  was  taken  up  in  handling 
the  many  order  forms  and  report  sheets  required  in 
the  centralized  control. 

The  question  of  organization  was  brought  up  at  a 
meeting  of  the  board  of  directors.  It  was  suggested 
that  the  offices  of  the  three  territorial  sales  managers 
be  discontinued,  that  the  accounting,  billing,  credit 
and  collection  work  be  transferred  to  the  branch  offices, 
and  that  the  branch  managers  be  given  a  freer  rein  in 
their  territories.  The  general  sales  manager  was  re- 
quested to  draw  up  a  statement  to  be  included  in  the 
organization  manual  of  the  company  setting  forth  the 
functions  and  duties  of  the  branch  managers  under  the 
new  arrangement.  Further,  it  was  requested  that  he 
state  the  relationship  of  the  branch  manager  to  the 
various  functional  officials  in  the  central  organization 
such  as  the  New  Product  Manager,  the  Merchandise 
Manager,  Credit  Manager,  and  Statistician. 

Questions 

1.  What,  in  general,  would  be  the  duties  of  the 
branch  manager  under  such  a  system? 

2.  What  would  be  his  relationship  to  the  functional 
managers? 


SALES  ORGANIZATION  107 

Problem  50 

Relation  Between  Advertising  and  Selling 
Departments* 

(a)  ''It  may  be  that  the  sales  manager  is  gradually 
absorbing  the  functions  of  the  advertising  manager  and 
leaving  the  latter  as  a  sort  of  bureau  head  charged  with 
carrying  on  one  little  branch  of  the  sales  effort.  It 
may  be  that  the  sales  manager  is  going  to  be  rebuilt 
into  an  advertising  manager,  as  mass  salesmanship  gets 
more  and  more  important  and  eliminates — if  it  ever 
will  ehminate — a  large  percentage  of  personal,  selling. 
It  may  be  that  a  new  job  will  have  to  be  created  for  a 
higher-powered  executive  who  will  be  superimposed 
over  the  other  two.  Wherever  advertising  effort  has 
been  well  conceived,  it  has  served  powerfully  to  reduce 
the  personal  effort  exerted  by  each  salesman  in  making 
each  sale.  The  advertising  manager  who  has  lived  up 
to  the  bigness  of  his  job  has  often  been  able  to  see  things 
a  little  more  broadly  than  the  sales  manager ;  he  handles 
masses  of  individuals  and  communities  of  opinion.  The 
sales  manager,  by  studied  emphasis  on  the  function  of 
advertising  as  a  'sales  help',  can  build  up  an  impressive 
thesis  in  support  of  his  priority.  Some  executives  see 
only  the  necessity  of  closer  and  more  effective  alliance 
between  the  two  departments.  Some  foresee  a  merger 
in  which  both  shall  sink  their  identity  into  one  or  the 
other  or  into  something  bigger.  Some  think  that  the 
process  of  evolution  in  each  case  will  depend  upon  the 
personality  of  the  advertising  manager  or  sales  man- 
ager. Some  think  that  one  thing  will  happen  in  the 
large  concern,  another  in  the  small." 

(6)  "Instead  of  these  two  positions  merging  into  one, 
I  would  think  there  would  be  a  greater  concentration 
into  each  one  as  separate  units.  In  other  words,  the 
advertising  manager  is  becoming  a  specialist  in  his  own 
line  and  the  sales  manager  is  becoming  more  efficient 
in  his.  There  must  be  a  very  close  working  arrange- 
ment and  a  mutual  knowledge  on  the  part  of  the  sales 

*Advertising  and  Selling,  Nov.  13,  Nov.  20,  Nov.  27.  1920. 


lOS        PlioHLl'l.MS  L\  SALES  MANAGEMENT 

nianaRor  and  advortisinp;  manager.  Each  has  too  big 
a  jol)  to  1)('  lianclUnl  by  tlic  same  man,  unless  through  a 
very  broad  experience  it  is  possible  for  one  man  to  direct 
them  both,  but  the  operations  must  have  a  distinction. 
'l\w  sales  manager  is  selling  merchandise  to  the  dealer 
and  the  advertising  manager  is  selling  a  belief  to  the 
minds  of  the  ])ublip.'' 

(c)  "I  look  to  see  a  new  title;  which  is  rapidly  coming 
to  the  fore,  that  of  merchandising  or  sales-promotion 
manager,  which  w  ill  finally  take  care  of  the  two  sep- 
arate and  distinct  lines  which  now  are  taken  care  of  by 
salesmen  and  advertising.  I  think,  however,  that  there 
will  always  be  an  advertising  manager.  He  may  degen- 
erate to  become  simply  the  head  of  a  su])-department  in 
a  sales  department,  just  as  now  the  usual  advertising 
departments  are  considerably  subdivided." 

(d)  "In  one  particular  line  of  business  within  the 
past  year  the  sales  managers  of  four  nationally  know^n 
concerns  have  been  promoted  either  to  be  vice-presi- 
dents or  directors,  or  both,  in  their  respective  com- 
panies, whereas  the  advertising  managers  in  those 
companies  still  retain  that  title  and  apparently  their 
same  circle  of  influence  in  their  respective  organiza- 
tions." ' 

(e)  "Depends  upon  size  and  character  of  business. 
Impossible  in  a  large  business  for  any  one  man  to  have 
the  time,  experience  or  ability  to  handle  both  positions 
effectively." 

(/)  "Any  business  is  an  'eternal  triangle';  speaking 
broadly,  there  are  but  three  departments:  production, 
selling,  and  finance.  There  should  be  a  broad-gaged 
officer  of  the  companj^  over  each  of  these  departments. 
There  should  be  a  Sales  ^Manager;  under  him,  the 
Director  of  Salesmen  and  the  Advertising  Director;  the 
Director  of  Salesmen  may  have  several  vice-directors, 
such  as  Field  Managers,  to  train  and  work  with  the 
salesmen  in  the  field.  District  Sales  Managers  respon- 
sible for  the  sales  in  given  districts,  or  Division  Sales 


SALES  ORGANIZATION  109 

Managers  who  are  expected  to  work  with  the  salesmen 
to  increase  the  sales  of  certain  lines  if  the  house  sells  a 
number  of  products.  Or  there  may  be  Vice-Sales- 
managers  responsible  for  sales  to  certain  industries. 
The  Advertising  Director  may  have  several  vice-adver- 
tising-directors such  as  National  Publicity  Manager, 
Direct  Mail  Manager,  Dealer  Helps  or  Localized 
Advertising  Manager,  etc.  In  95%  of  all  large  busi- 
nesses, there  are  and  always  will  be  both  personal 
selling  and  mass  selling  and  the  work  accomplished  by 
both  of  these  methods  is  in  reality  one  branch  or. depart- 
ment of  the  business.  I  believe  that  in  every  really 
successful  concern  there  must  be  a  chief  selling  executive 
over  the  sales  manager  and  the  advertising  manager." 

{g)  "With  the  growth  of  any  concern,  a  natural 
division  inevitably  occurs  between  the  advertising  and 
sales  departments." 

Questions 

1.  What  are  the  arguments  for  and  against  the 
coordinate  position  for  sales  and  advertising  depart- 
ments? 

2.  How  is  the  divergence  of  views  above  to  be 
explained? 


Problem  51 
Organization  of  Advertising  Department 

In  the  organization  of  concerns,  wide  variation  is  to 
be  found  both  in  the  place  of  advertising  in  the  general 
organization  and  in  the  internal  organization  of  the 
department  itself.  In  some  organizations,  the  adver- 
tising department  is  coordinate  with  the  sales  depart- 
ment. Where  these  are  not  brought  into  harmony  by 
superior  authority,  there  arise  questions  of  organization 


110        TKoHLIvMS   IN  SALllS  MANACiEMKNT 

and  method  of  {'oordiiiation  of  the  various  types  of  sales 
effort.  It  is  obvious  that  the  size  of  the  advertising 
department  will  depend  entirely  upon  the  stress  laid 
upon  advertising,  the  size  of  the  concern,  and  the 
extent  to  which  the  performance  of  advertising  func- 
tions is  delegated  to  outside  agencies.  A  mail-order 
house,  ])rinting  its  own  catalog  and  distributing 
them  throughout  the  country,  may  have  hundreds  in 
its  advertising  department.  A  concern  selling  a  single 
product,  advertising  in  national  media,  and  placing  its 
advertising  through  an  advertising  agency,  may  have 
no  advertising  department  at  all.  The  practice  is 
growing  of  subordinating  the  advertising  department 
to  the  general  sales  department,  making  the  sales  or 
distril)ution  manager  one  who  directs  distribution,  not 
only  through  direction  of  i)ersonal  salesmanship,  but 
also  of  ad\'ertising  and  printed  publicity  of  all  kinds. 

In  another  direction  there  is  likewise  some  evidence 
of  a  tendency  to  place  the  advertising  department  either 
in  close  connection  with  or  an  integral  part  of  a  so- 
called'sales-promotion  de])artmcnt,  in  which  the  various 
types  of  activity,  including  analysis,  research,  and  plan- 
ning, which  look  forward  to  the  increase  of  sales,  are 
centralized. 

A  large  automobile  concern  producing  a  high-grade 
car  has  an  ach'ertising  organization  in  which  the 
assistant  advertising  managers,  under  the  direction  of 
the  advertising  manager,  are  specialists  in  various  lines. 
One  of  them  deals  with  advertising  and  writing  in 
technical  journals;  another  with  trucks;  a  third  with 
art;  a  fourth  with  photos;  a  fifth  wuth  moving  pictures; 
a  sixth  with  the  clerical  and  recording  functions. 

A  manufacturer  of  office  api)liances  oj)erates  on  a 
committee  plan.  The  board  of  directors  discusses  the 
general  outline  of  a(h'ertising  annually,  analyzing  the 
reports  of  the  i)revious  year's  work,  and  approves  an}' 
plans  invoh'ing  additional  expenditure.  In  the  Promo- 
tion Committee,  general  plans  are  discussed  subject  to 
the  sales  manager's  ai)i)roval,  l)ut  all  members  must 
work  in  closest  connection  with  the  sales  manager. 


SALES  ORGANIZATION  111 

A  large  electric  company,  manufacturing  hundreds 
of  different  products  from  electrical  installations  of  the 
largest  size  to  small  motors  and  lamps,  is  concerned 
with  the  problem  of  organizing  its  advertising.  The 
company  is  a  consolidation,  in  which  the  constituent 
plants  specialize  in  different  products.  There  are  two 
possible  courses: 

(1)  Centralizing  the  advertising  organization  entirely 
at  the  main  office  of  the  consolidation  at  which  the 
sales  work  is  centralized; 

(2)  Building  up  an  advertising  organization  at  each 
plant,  the  size  of  the  organization  to  depend  upon  the 
extent  to  which  advertising  agencies  are  to  be  relied 
upon  for  performing  various  functions;  in  other  words, 
the  various  plant  organizations  are  to  have  their  own 
advertising  staffs  controlled  only  in  a  most  general 
fashion  by  the  central  sales  office. 

Question 
Which  plan  should  be  adopted? 


Problem  52 
Organization  of  Advertising  Department 

The  following  letter  appeared  in  an  issue  of  Printers' 
Ink. 

It  has  been  stated,  and  truly  so,  that  the  best  advertising 
committee  is  one  composed  of  a  board  of  five  members, 
with  four  of  them  absent.  In  other  words,  too  many  cooks 
spoil  the  broth. 

At  just  about  this  point  I  can  imagine  Mr.  Sales  Man- 
ager, Mr.  President  or  Mr.  Executive  shaking  his  head  and 
thinking  'another  know-it-all,  obstinate  (maybe  sore) 
advertising  manager.'  But  not  so  for  a  minute;  the  writer 
has  never  had  the  fortune,  or  misfortune,  to  run  the  gauntlet 
of  an  advertising  committee. 

On  the  other  hand,  consultations  and  cooperation  with 
the   sales   departments   are   most   certainly   recommended, 


112        I'KOHJ.KMS  IN  SALKS  MANAGEMENT 

luul  as  far  as  the  matter  of  a  thorough  understaudiiifz;  with 
tlie  treasurer  is  concei-iied,  one  can  liardly  undei'stand  how 
an  advertisinji  department  could  function  without  sucli. 
Hut  tlie  pt)wer  of  an  advertising  committee  should  certainly 
he  limited  to  simply  settinfj;  the  general  policy,  plans  and 
finaiicial  end,  and  not  permitted  to  work  on  the  details  of 
every  sketch,  ever>'  piece  of  copy,  and  the  like. 

For  I  contend  that  any  advertising!:;  nuinajj;ei'  who  has  had 
ins  plans  laid  out,  his  policy  set  down,  a  fi;<'ii<'nd  style  to  be 
ft)llowe(l  jiiven  him,  an  appropriation  allowed,  and  cannot 
i^et  the  cainpaign  in  motion  without  goinjj;  before  a  com- 
mittee at  every  twist  and  turn,  is  not  deserving  of  his  title. 
Why  have  an  advertising  manager,  if  every  member  of  the 
committee  thinks  he  knows  as  mucii  about  advertising  as 
the  manager  himself?  Why  not  hire  a  twenty-five-dollar-a- 
clerk,  who  will  at  any  time  be  set  in  motion  by  the  pulling 
of  the  strings  of  the  advertsing  committee,  instead  of  engag- 
ing high-salaried  advertising  experts? 

If  you  were  to  plan  an  addition  to  your  plant,  you  would 
call  in  consultation  the  heads  of  the  various  departments 
concerned,  ascertaining  their  requirements  and  receiving 
their  reconnnendations.  But  you  would  not  have  your 
construction  engineer  sit  l)efore  this  same  committee,  to 
have  them  tell  the  engineer  how  the  work  should  be  done. 
Why — ))ecause  this  engineer  has  studied  many  years  on  the 
subject  of  engineering,  has  had  much  practical  experience 
in  his  work- — you  have  confidence  in  him  and  admit  that 
he  knows  more  about  his  job  than  you.  Likewise  in  adver- 
tising— the  advertising  manager  has  studied  many  years 
about  sales  and  advertising,  has  had  much  experience,  but 
his  executives  lack  the  same  confidence  in  him  that  they 
do  in  the  engineer,  and  will  not  grant  that  the  advertising 
manager  knows  more  al)out  his  job  than  they  do,  but  insist 
on  drawing  people  from  every  section  of  the  organization 
to  take  a  shot  at  everj'  piece  of  copy  and  sketch  proposed. 

If  you  do  not  have  confidence  in  your  advertising  mana- 
ger— fire  him — there  really  and  truly  are  some  good,  efficient 
ones  to  take  his  place. 

Give  your  advertising  manager  your  policy,  sales  plans 
and  appropiiation,  consultations  with  the  sales  committee, 
in  order  to  bring  al)out  a  thorough  cooperation  with  the 
sales  and  advertising  departments;  then  let  him  produce 
unhindered;  if  you  don't  like  what  he  is  doing,  tell  him  so, 
but  don't  tie  him  hand  and  foot. 

Question 
Is  the  argument  sound? 


SALES  ORGANIZATION  .  113 

Problem  53 
Organization  of  Advertising  Department 

The  president  of  a  large  advertising  agency  makes  the 
statement  that,  in  many  lines,  sales  forces  are  being  cut 
down,  also  advertising  staffs.  The  advertising  man- 
ager is  being  put  into  sales  work  or  is  being  dropped. 
Advertising  agencies  are  taking  over  the  responsibilities 
of  campaigns  of  advertisers,  claiming  that  they  do  the 
work  more  efficiently  and  save  the  cost  of  an  advertising 
department.* 

The  Northrup  Company  is  a  national  advertiser  of 
considerable  importance  and  is  noted  for  its  effective 
advertising  programs.  From  the  outset,  the  company 
has  been  liberal  in  its  advertising  appropriations  and 
constantly  kept  their  products  before  the  buying  public. 
For  certain  of  their  products,  national  magazines  have 
been  used,  while  trade  journals  have  been  used  for 
giving  publicity  to  their  filing  devices.  Agents  in  the 
various  cities  are  furnished  copy  and  cuts  for  local 
newspaper  and  street-car  advertising,  also  catalogs  and 
circulars  imprinted  with  their  own  names.  Motion- 
picture  slides,  window  cut-outs,  show-window  contests, 
and  the  house  organ  have  been  used  with  good  results. 
The  company's  sales  have  increased  from  year  to 
year,  but  the  new  manager  feels  that  the  advertising 
department  is  unnecessary  for  the  reason  that  adver- 
tising appropriations  and  general  advertising  policy  are 
passed  upon  by  the  sales  manager  in  conference  with 
the  president,  general  manager,  and  secretary  of  the 
company  and  the  technical  work  and  preparation  of 
copy  are  given  over  to  an  advertising  agency.  There 
is  no  saving,  so  the  manager  claims,  in  maintaining  a 
comprehensive  department  in  the  company  itself  to 
take  care  of  advertising,  since  advertising  agencies 
secure  their  compensation  mainly  from  a  percentage  of 
the  amount  spent  for  space.  By  arrangements  with 
publishers,  advertising  agencies  secure  a  percentage 
varying  from  10%  to  15%,  while  the  company  as  a 

*Prin(ers'  Ink,  September  14,  1916. 


114        PROBLEMS  IN  SALES  MANAGEMENT 

consumer  of  advertising  space  must  pay  the  full  card 
rate  or  full  contract  rates.  Consequently,  if  the  com- 
pany pays  S2()(),UUU  for  sj)ace  in  the  course  of  a  year,  the 
adv'ertishig  agency  gets  from  $20,000  to  $30,000,  for 
which  it  will  jx'jforni  most  of  the  functions  now 
duplicated  or  performed  only  by  the  advertising  depart- 
ment of  the  company.  The  manager  states  that  a  good 
clerk,  who  could  take  care  of  ch(>cking  up  advertising 
bills,  is  suflicient  for  the  particular  company. 

Question 
Is  the  new  manager's  decision  wise? 


Problem  54 

Relation  Between  Export  and  Domestic  Sales 

Departments 

A  prominent  export  manager,  in  discussing  the  rela- 
tion of  the  export  manager  to  the  domestic  sales  man- 
ager, in  the  Export  Review,  says  that  a  capable  export 
manager  cannot  specialize  on  any  one  line  of  work,  but 
must  be  familiar  in  a  general  way  with  every  division 
of  the  business. 

He  must  know  how  to  develop  foreign  sales,  he  must  be 
conversant  with  foreign  advertising  problems  and  understand 
foreign  credits  and  collections.  Ho  should  know  thoroughly 
conniiercial  geography,  international  law  and  foreign  tariffs. 
He  must  know  the  technique  of  handling  export  shipments 
and  must  be  endowed  with  an  unusual  amount  of  patience 
in  reaching  an  understanding  of  the  psychology  of  the 
foreign  buj'ers. 

Seldom  does  a  domestic  official  or  executive,  whose 
mind  is  occupied  principally  with  domestic  conditions, 
know  very  much  about  many  problems  that  exist  abroad. 
As  an  example:  the  domestic  sales  manager's  problems  are 
to  market  the  merchandise  manufactured  by  his  company 


SALES  ORGANIZATION  115 

in  the  United  States  through  the  customary  channels  em- 
ployed by  the  line  he  is  handling.  It  may  be  marketing 
through  jobbers,  through  exclusive  dealers,  direct  salesmen 
or  by  mail.  His  problems  are  the  same  in  New  York  State 
as  they  are  in  Illinois.  The  customs  of  the  people  are  alike, 
the  language  is  the  same,  and  the  general  sales  methods  are 
uniform.  The  domestic  credit  man  can  pursue  the  same 
methods  in  extending  credit  or  making  collections  in  Louisi- 
ana as  in  Maine.  He  can  observe  the  uniform  terms  laid 
down  by  the  house,  and  when  confronted  with  a  particularly 
difficult  collection  problem,  he  may  seek  the  advice  of  his 
local  attorney  or,  perhaps,  refer  the  collection  to  his  traveling 
salesman  or  branch  office  on  the  ground.  The  domestic 
traffic  manager  ships  his  goods  by  rail  with  the  exception 
of  coastwise  steamers,  and  after  placing  the  merchandise  on 
the  freight  cars  or  delivering  it  to  the  express  company,  his 
troubles  are  ended.  The  advertising  manager,  in  turn,  may 
develop  one  type  of  advertising  and  secure  a  tremendous 
circulation  in  the  United  States  through  magazines  and 
newspapers. 

Now,  let  us  turn  to  the  export  manager.  We  find  that 
his  pro])lems  are  considerably  multiplied.  Sales  methods 
differ  in  various  parts  of  the  world.  In  some  countries  he 
may  establish  branch  offices;  in  other  countries  he  may 
find  it  expedient  to  sell  through  jobbers  who  will  distribute 
to  the  local  dealers;  again,  there  are  countries  or  cities 
where  exclusive  agencies  may  be  made,  and  in  some  out- 
of-the  way  places  he  finds  it  necessary  to  solicit  business  by 
mail.  Only  the  larger  institutions  are  able  to  employ  suffi- 
cient traveling  representatives  to  represent  properly  the 
line  in  foreign  fields.  He  finds  many  varying  types  of 
peoples  and  must  handle  the  Latin  in  a  different  manner 
from  the  Scandinavian  or  the  Oriental.  His  advertising 
proV)lems  are  complex  because  of  the  different  types  of 
people  he  attempts  to  reach,  the  many  languages  that  are 
used  in  various  parts  of  the  world,  the  many  classes  of 
periodicals  and  the  difficulty  in  selecting  those  that  are  of 
the  right  character  in  which  to  exploit  his  line.  He  must 
find  many  sources  from  which  to  secure  information  and 
trade  tii)s.  He  does  not  have  the  same  facilities  for  obtain- 
ing credit  information  that  are  found  in  this  country  and 
must  operate  entirely  along  different  lines,  not  only  in 
passing  his  credits  but  in  nuiking  his  collections.  His 
traffic  jiroblems  are  entirely  different  from  domestic,  as, 
after  the  goods  arrive  at  the  seaboard  from  the  factory,  he 
must  exercise  a  great  deal  of  care  in  properly  handling 
shipments  or  the  possibiUty  of  financial  loss  occurs.  While 
he  may  have  an  experienced  traffic  man  to  handle  the  detail, 


116       rUOHLKMS  IN  SALES  MANAGEMENT 

the  export  iniinHfj;er  sliould  1)0  familiar  with  commercial 
^[eography,  steainship  lines,  methods  of  transportation  in 
foreijj;n  count  lies,  export  packiufi;  marine  insurance,  tariffs, 
consular  regulations  and  many  other  details. 

It  is  easily  seen,  therefore,  that  the  export  manager  is 
really  a  general  manager  of  the  foreign  division  of  the 
business,  and  in  his  own  dominion  must  be  as  versatile  and 
well  posted  as  the  general  manager  of  the  entire  business. 
In  order  that  the  export  manager  secure  the  best  results, 
he  should  not  ))e  under  the  control  or  sul)ject  to  the  rules 
and  regulations  of  the  domestic  executives.  He  should 
be  given  full  authority  to  conduct  export  business  indepen- 
dently and  should  stand  or  fall  upon  his  own  record. 

Question 
Is  this  a  valid  argument  for  a  separate  control  for 
domestic  and  export  sales  departments? 


Problem  55 
Cooperation  Between  Domestic  and  Foreign  Sales 
Departments 

A  well-known  sales  and  export  manager  lists  the 
forms  of  organization  for  export  which  are  to  be  found 
in  accepted  American  practice.* 

"(1)  ^Management  and  immediate  control  of  both 
export  and  domestic  sales,  with  no  titles  indicating 
departmental  leadership. 

"(2)  Management  in  immediate  control,  with  staff 
containing  neither  sales  nor  export  manager  as  such, 
but  where  titles  are  used  to  describe  the  activities  of 
individuals. 

"(3)  Management  in  immediate  control  of  domestic 
sales,  with  an  officer  of  the  company  acting  as  a  sales 

*Walter  Wyman,  in  World's  Markets,  February  1921,  p.  26.  See 
also  subsequent  articles  in  March  and  April  issues. 


SALES  ORGANIZATION  117 

manager,  but  with  a  titled  export  manager  responsible 
for  initiative  and  foreign  sales. 

"(4)  Management  in  control  of  separate  domestic 
and  export  sales,  respectively,  headed  by  a  sales 
manager  and  an  export  manager  with  no  common 
duties. 

"(5)  Management  in  immediate  control  of  export 
sales,  with  domestic  sales  directed  by  sales  manager 
with  no  export  duties. 

"(G)  Management  in  control  of  domestic  sales 
directed  by  sales  manager;  foreign  sales  under  control 
of  the  sales  manager. 

"(7)  Management  in  control  of  domestic  sales  di- 
rected by  a  sales  manager;  foreign  sales  handled  by 
separate  sales  company. 

"(8)  Management  in  control  of  domestic  sales 
directed  by  sales  manager;  export  sales  handled  by 
branch  house  manager  or  managers  located  at  seaboard 
cities.  Branch  house  manager  or  managers  under 
control  of  management  on  export  activities. 

"(9)  Management  in  control  of  domestic  sales 
directed  by  sales  manager,  who  also  directs  foreign 
sales  handled  by  branch  houses. 

"(10)  Management  in  control  of  domestic  sales  di- 
rected by  sales  manager  and  management  in  immedi- 
ate control ;  export  sales  handled  by  combination  export 
manager,  manufacturers'  representative  resident  in 
United  States,  export  commission  houses,  or  combina- 
tion export  travelers. 

"(11)  Management  in  control  of  domestic  sales  and 
export  sales  directed  by  sales  manager,  who  controls 
foreign  sales  handled  by  combination  export  manager 
and  other  agencies  outside  the  enterprise. 

"(12)  Management  in  control  of  domestic  and  export 
sales  directed  by  combination  sales  and  export  manager, 
his  associates  or  assistants  or  both. 


118        PROBLEMS  IN  SALES  MANAGEMENT 

"(13)  Managoinont  in  control  of  domestic  sales  di- 
rected by  sales  nuinager;  foreign  sales  rights  sold  to 
outside  interests. 

"(14)  Management  in  control  of  domestic  sales 
directed  by  sales  manager;  foreign  sales  rights  sold  to 
outside  interests. 

"(15)  Management  in  control  of  domestic  sales 
directed  by  sales  manager;  foreign  sales  rights  sold  to 
outside  interests." 

Question 
Which  forms  are  to  be  preferred? 


Problem  56 
Organization  of  Sales  Promotion 

Sales  Research 

The  Hammond  Manufacturing  Company,  located  in 
Springfield,  Massachusetts,  manufactures  a  line  of 
gauze  bandages  and  absorbent  cotton  which  is  sold  to 
hospitals,  physicians,  and  the  drug  trade.  The  plant 
is  systematically  organized  in  accordance  with  the 
Taylor  theories  of  scientific  management.  According- 
ly, in  the  production  department  there  is  a  high  degree 
of  specialization  according  to  functions. 

During  the  latter  part  of  1920,  the  president  of  the 
Hammond  Manufacturing  Company  informed  Mr. 
Henry  Johnson,  sales  manager,  that  the  Taylor  Society 
was  to  have  a  meeting  in  New  York  in  December, 
at  which  the  question  of  applying  scientific  manage- 
ment to  selling  was  to  be  discussed,  and  suggested  that 
Mr.  Johnson  attend  the  meeting. 

Mr.  Johnson,  on  returning  to  the  office,  submitted  the 
following  memorandum  to  the  president  of  the  company : 


1 


SALES  ORGANIZATION  119 

In  the  development  of  scientific  management  as  applied 
to  production,  a  cardinal  principle  has  been  the  separation 
of  the  function  of  planning  from  that  of  performance. 
While  the  various  advocates  of  so-called  "scientific  manage- 
ment" have  modified  more  or  less  the  principles  as  enun- 
ciated by  Frederick  W.  Taylor,  this  general  division  and  the 
emphasis  upon  functional  organization  have  been  retained. 
The  Taylor  Society,  an  organization  devoted  to  the  further- 
ance of  scientific  study  of  management,  has  undertaken  to 
promote  the  movement  for  the  application  of  principles 
which  have  been  successful  in  production  management  to 
the  management  of  sales.  As  a  first  step,  committees  were 
appointed  and  an  investigation  made  of  representative  sales 
departments.  At  a  meeting  of  the  Taylor  Society,  pre- 
Uminary  reports  were  presented  by  a  committee  on  the 
organization  and  functions  of  the  sales  engineering  depart- 
ment and  a  committee  on  the  organization  and  functions  of 
the  sales  operating  department.  These  conclusions  were 
briefly  as  follows*: 

(1)  The  conditions  or  causes  which  have  led  to  the 
establishment  of  engineering  and  operating  as  separate 
major  functions  in  the  production  of  products  exist  also 
with  respect  to  distribution  and  indicate  the  necessity 
for  the  recognition  of  engineering  and  operation  as  major 
functions  in  the  production  of  sales. 

(2)  Master  planning  and  scheduling  can  properly  be 
considered  sales  engineering,  delegating  detailed  planning 
and  scheduling  as  secondary  functions  of  operation.  If 
one  concedes  that  the  distributing  organization  is  the  one 
that  usually  and  naturally  originates  projects  involving 
the  whole  plant  organization,  then  it  becomes  obvious  that 
a  research  and  master  planning  and  scheduling  function 
must  have  a  close  and  sympathetic  relation  with  the 
distribution  organization;  hence  the  choice  of  the  name 
"Sales  Engineering"  for  this  major  function. 

(3)  The  sales-engineering  function  presents  at  least 
three  distinct  phases : 

(a)   Field  research. 

(6)    Technical  assistance. 

(c)    Master  planning  and  scheduling. 

(4)  It  should  be  recognized  that  the  major  functions 
of  sales  engineering  is  to  analyze,  plan  and  schedule 
future  projects  and  that  the  planning  and  scheduling  of 
current  projects  is  a  function  of  the  operating  divisions. 

"Bulletin  of  the  Taylor  Society,  Vol.  V,  No.  6,  December,  1920. 


120       1'H()HLI:MS  IX  sali-is  maxacement 

(5)  Selling  seems  to  hicak  down  into  two  major  fiuu"- 
tions,  distinct  in  thcii-  nature  and  in  the  types  of  personnel 
re(|uire(l  for  tlieir  performance: 

(a)  The  making:;  of  larj^er  plan>  for  ilie  marketinji;  of 
a  product,  invoiviufi;  analysis  of  the  market  and  the 
product,  the  i)reparation  of  master  schedules,  and  the 
coordination  of  production,  financial  and  sellinp;  re- 
sources; called  Sales  Mnjiineerinji;,  Sales  Planning, 
Merchandising,  Merchandise  Control,  etc.,  and  in 
many  instances  cared  for  by  advertising  or  selling 
agencies: 

(h)  The  actual  conduct  of  the  selling  operations, 
involving  the  detailed  planning  of  selling  operations, 
the  selection,  training  and  direction  of  the  sales  force, 
the  detailed  planning  and  conduct  of  selling  operations 
when  salesmen  are  not  used,  and  all  contacts  with  the 
customer;  called  in  this  report  "Sales  Operating." 

(6)  Sales  Operating  seems  to  break  down  into  two 
principal  functions: 

(a)  The  detail  planning  fe»r  the  i)reparation  of  materi- 
als and  for  the  supervision  and  control  of  all  elementary 
selling  processes.  (This  function  breaks  down  into  ele- 
mentary functions  or  processes.) 

(6)  The  actual  conduct  of  sales  operations  in  accor- 
dance with  the  planning  and  control  established  in 
6  (a).  This  function  also  breaks  down  into  elementan.' 
functions  and  processes.) 

This  report  is  concerned  with  6  (a)  only;  investigation 
of  6  (6)  is  to  come  later. 

(7)  Conclusions  (5)  and  ((5)  are  the  result  of  a  .study 
of  a  variety  of  selling  departments  and  present  functions 
which  seem  to  be  inherent  in  selling;  they  are  not,  how- 
ever, recognized  by  every  selling  organization  and  their 
execution  provided  for  by  functionaliztnl  parts  of  the 
organization.  In  one  organization  one  or  more  functions, 
in  another  organization  other  functions,  are  recognized 
and  defined. 

(8)  Taylor  has  shown  by  his  work  in  production  that 
proper  results  can  be  brought  about  only  liy  systematized 
— not  systemized' — work,  in  which  plans,  functions, 
duties  and  (execution  are  all  clearly  defined.  This  is  what 
your  committee  desires  to  see  done  for  selling. 

Organization  for  sales  research,  sales  planning,  and  sales 
promotion  is,  of  course,  a  comparatively  recent  develop- 
ment.    Both  in  function  and  in  relationship  to  the  sales  and 


SALES  ORGANIZATION  121 

other  departments,  existing  practices  reveal  wide  differences 
of  opinion  as  to  sales  research  and  sales-promotion  depart- 
ments. While  in  Clevejand,  a  nationally  prominent  rubber 
manufacturer  told  me  that  he  has  a  separate  statistical 
department  and  a  promotion  department  for  each  of  the 
three  lines  of  his  product,  with  a  sales-promotion  represen- 
tative in  each  branch.  On  the  othei'  hand,  a  manufacturer 
of  watches  and  clocks  stated  that  he  places  all  sales  re- 
search, sales  plamiino-,  and  sales-promotion  activities  under 
the  direct  care  of  the  marketing  manager.  The  sales- 
promotion  manager  of  a  very  large  paint-manufacturing 
concern  gives  the  following  outline  of  the  organization  and 
function  of  his  sales-promotion  department.* 

Roughly  classified,  the  work  of  the  sales-promotion 
department  embraces  the  following  divisions  of  classifi- 
cations : 

(1)  Organization. 

(2)  Development  of  new  markets. 

(3)  Increasing  the  business  of  established  trade. 

(4)  Sales-research  work. 

(5)  Sales  investigation. 

(6)  Departmental  details. 

We  have  an  extensive  sales-promotion  organization  and 
intend  it  to  grow  still  larger.  At  present  we  have  1 1  dis- 
tinct and  separate  sales-promotion  departments  located  in 
the  following  cities : 

Boston  Cincinnati  Kansas  City 

Newark  Chicago  Dallas 

Philadelphia  Minneapolis  San  Francisco 

Cleveland  St.  Louis 

Each  organization  has  its  limitations  and  no  sales-pro- 
motion department  can  give  individual  attention  to  more 
than  50  traveling  representatives  and  750  dealers.  When 
I  mention  750  dealers,  I  am  talking  about  750  towns  in 
which  we  are  represented  by  dealers,  because  our  proposition 
embraced  agency  requirements  and  a  great  many  of  our 
products  are  sold  to  only  one  merchant  in  the  ordinary -size 
town  of  less  than  25,000. 

Why  do  we  have  11  district  sales-promotion  depart- 
ments, and  not  one  located  in  our  main  office?  The  reason 
is  obvious — the  sales-promotion  department  in  Cleveland 
cannot  be  in  touch  with  the  needs  of  our  Pacific  Coast  trade 
and  cannot  give  our  representative  on  the  Pacific  Coast 
personal  and  special  attention.     Neither  can  the  Newark 

*Sales  Manager,  March,  1921.     The  Work  of  the  Sales  Profnotian 
Department. 


122       PROBLEM^'  IN  SALES  MANAGEMENT 

sales-promotion  (Icpiirtinont  serve  the  Cleveland  district 
trade  and  rcprcscntiitivcs  with  the  assurance  of  100% 
efficiency  and  results. 

Tlie  manager,  of  course,  has  complete  supervision  of  his 
dei)artMU'nt.  He  is  responsiljle  for  starting  new  campaigns 
decided  on  by  heatUiuarters.  He  works  in  a  special  way 
with  the  repi-(>sentatives  and  frequently  goes  out  with  them 
on  special  assignments. 

The  chief  clerk  is  responsible  to  the  manager  for  the 
detail  and  personnel  of  the  department.  He  reads  the 
representatives'  call  rei)orts,  does  promoting  off  these 
reports  and  handles  all,  other  work  in  connection  with  the 
representatives.  The  chief  clerk  must  be  a  good  corre- 
spondent, because  he  does  a  great  deal  of  letter  writing. 

r  The  record  clerk  does  all  posting  of  call  reports  in  the  call 
books,  tacks  the  maps  and  makes  out  special  reports  required 
by  the  sales  managers. 

The  sales  statistical  clerk  posts  and  classifies  all  sales 
made  in  the  district.  A  sales-promotion  department 
without  a  complete,  up-to-the-minute  sales  record  of  every 
customer  is  like  a  ship  without  a  rudder — it  cannot  operate 
efficientl}'. 

The  advertising  clerk  is  responsible  for  the  condition  and 
extent  of  the  stock  of  advertising  kept  at  the  district  ware- 
house. Let  me  explain  that  our  sales-promotion  organiza- 
tion is  responsible  for  all  advertising  features  the  minute 
they  are  through  production.  This  includes  folders,  book- 
lets, displays,  window  trim,  newspaper  electros,  etc.;  in 
fact,  every  feature  produced  conies  under  our  control. 
This  enables  us  to  use  these  advertising  features  to  sell 
from  and  insures  the  trade's  getting  enough  advertising — 
not  too  much  nor  too  little.  Our  representatives  order  the 
advertising  to  be  sent  to  their  dealers — the  advertising 
clerk  is  responsible  for  seeing  that  the  features  to  be  sent 
are  in  stock. 

The  advertising  stockkeeper  fills  the  advertising  orders — 
imprints,  folders,  etc. — and  keeps  the  stock  in  good,  usable 
condition. 

The  mechanical  clerk  operates  such  devices  as  the  address- 
ograph,  multigraph,  mimeograph,  etc.,  which  are  constantly 
used  in  getting  out  our  sales-promotion  letters  and  literature. 

Stenographers  and  typists  are,  of  course,  necessary  and 
the  number  is  increased  in  busy  seasons  and  cut  down 
between  seasons. 


SALES  ORGANIZATION  123 

This  is  a  brief  description  of  each  of  our  district  organi- 
zations. The  manager,  chief  clerk,  advertising  clerk  and 
advertising  stockkeeper  are  men — the  rest,  women. 

The  district  sales-promotion  departments  report  through 
the  district  manager  to  the  general  sales-promotion  depart- 
ment at  Cleveland,  which  is  responsible  to  the  general  sales 
manager.  The  sales-promotion  departments  have  no  con- 
nection with  the  advertising  department. 

I  believe  that  it  would  be  advisable  for  us  to  have  a  sales- 
promotion  department  and  do  sales  research  work.  I  have 
not,  however,  settled  in  my  own  mind  whether  it  would  be 
consistent  with  the  functional  organization  principles  that 
exist  in  our  factory  to  combine  sales  research  and  sales- 
promotion  activities  in  one  department.  However,  I 
should  like  very  much  to  start  a  sales-promotion  depart- 
ment, and  I  think  for  the  time  being,  at  least,  the  sales 
research  should  be  in  this  department. 

Question 

1.  Does  consistent  application  of  functional  organi- 
zation principles  require  separation  of  sales  research 
and  sales-promotion  activities? 

2.  What  should  be  the  functions  of  the  general 
sales-promotion  department  at  sales  headquarters? 

3.  To  what  extent  can  decentralization  be  carried? 


Problem  57 
Organization  for  Sales  Research 

An  automobile  company  has  recently  organized  a 
commercial  research  department  whose  functions  are 
stated  as  follow^s: 

(1)  To  analyze  existing  routines  or  construct  new 
ones  for  other  departments  at  their  request. 

(2)  To  gather  statistics  bearing  on  the  market  in 
which  this  company  buys  and  sells. 


121        PROBLEMS  IX  SALES  MANAGEMP^NT 

(3)  To  forecast  (H-oiioinic  coiulitions  in  the  market 
in  which  it  Iniys  and  sells. 

(4)  To  picdeterinine  what  the  sales  performances 
should  1)('  ill  tho  various  doalors'  torritorios  and  as  a 
wliolc. 

(5)  To  auulyzc  tlie  sales  pcrl'onnanctcs  of  the  various 
dealers  and  point  out  faults  and  suggost  remedies. 

(6)  To  lay  out  the  boundaries  of  dealers'  territories 
along  scientific  lines. 

(7)  To  gather  information  and  work  up  ideas  on  the 
latest  and  best  methods  of  merchandising  the  com- 
pany's cars. 

Questions 

1.  Should  these  be  the  functions  of  every  research 
department? 

2.  What  omissions  may  be  noted? 

3.  The  chart  on  page  125  illustrates  the  organization 
of  the  above  concern  prior  to  the  formation  of  the 
commercial  research  department.  AVhere  should  the 
proposed  research  department  be  placed  in  the  organi- 
zation? 


Pkojjlem  58 

Organization  fok  ^Ianagement  op^  Credits 

The  position  of  the  credit  manager  in  organization 
has  by  no  means  been  standardized,  but  the  two  com- 
mon practices  are  as  follows: 

(1)  The  credit  manager  is  placed  under  the  treasurer 
or  chief  financial  officer  of  the  concern,  on  the  theory 
that  the  administration  of  credits  is  a  financial  matter 
which    can   be   best   handled   by   a   financial    officer. 


SALES  ORGANIZATION 


125 


MMM 

1     r~ 

1 — 1                                *      0      O                                                         J 

.!_  j 

J    " 

-                                              1 — 1                               r  ''     1 — 1 

1    ^ " 

ii                          r— 1                  i         1 — II — ill 

§        u 

i 

m    ^rl       1         L      °     - 

^ 

H                  1    t  Up.     ri-^^ 

p  f  [il  !  11  mfl      4l  ill 

Tl  1 

"  ^    1 

< 

1^     1 

1     T     -    Jll      •:             1          -^^ 

T  M 

T~^ 

U  i   ^      1  n  1 

r^                r^     £     K 

'— '                Y    •?     '— '     1 

1      r  ^ 

Tjnffln    D  ^  111 

rf-^-J-i-ia                              "        r-n 

Hinin^ninii       u  m 

m 

UnUiiJD             L| 

r-n 

1 

•o                                                    ^     LJ 

u 

^ 

1                                                                                   1-3               1 1 

a. 
u 
Q 
-1 
o  . 

X 

K 
O 

.  5  . 

H 

H 

g 

o 
u 
u 
> 

-  s  ■ 

T 

1    1    ULJUUUU                         1 

8 

0 

H 

5 

1 

i^  4i                                  1 

1- 

< 

U 

u 
X 
u 

CU 

c       - 

T3              0. 

nn 

1 — 1 — ^ — 1                                                                   ^ 

>             i 

^  1 

1   1    ^  M  1  1  1  1  1  "  ^  1  1  i 

j[^ 

p: 

V             ULi^UULJuUUU  LitJ  "2 

J_^    1 1       1 1    V— 1  L— 1  .— 1   l—l  1— 1  U-J   l_l   i—l  1_J     1_^                ^ 

s  1 

i                 sic                                     - 

1    '     8 

1            1    1    1   1    E    1    1    s                     :i 

T 

^      ■  1  ■  r  I " !  ■  1  ■  r  1  ■  1               i 

1 

^          LJLUliiJLJUULJU                LJJ 

" 

""              1      ll — II — II — 1! — II — 1 

— 

u     1  ,           n  nnra 

II  ^II^INII^II'^IUI    1 1  °-|    1  s.|  III  III        1 

r-^                    HzMmMll  NiW^HlHil     1 

!    1   °        H»   "        i       1    1     s 

1  1 — 1 

2       ^ 

1  n              |_j  u  u  u  u  u 

H        1 

O         o 

■   1  "  i  " 

^    >.                                       m 

1    [_ 

o[fJ             1  iriRnn        ^ 

^ 

t-?f                                     -c'ct 



1     1    "    s     5            -51=01 

'-    OS    --,•%■   i  ■    i    '            '      Ji~'5~iS"5~| 

M  1  '  '       i  [^|rj[l|[lj 

' — ' 

12G        IMiOJiLKMS  IN  SALES  MANAGEMENT 


Although  it  would  ho  admittcfl  hy  advocates  of  such  a 
plan  that  the  credit  de})artment  should  not  work 
counter  to  sales,  it  is  felt  that  the  removal  of  the  credit 
man  from  the  control  of  the  sales  manager  operates  as 
a  check  upon  the  natural  optimism  of  sales  executives. 
(2)  The  credit  manager  is  placed  under  the  control 
of  the  sales  executi\e,  on  the  principle  that  the  dis- 
tribution of  goods  includes  not  only  the  actual  selling, 
but  also  delivery  and  the  financing  of  sales,  likewise 
the  administration  of  credits  and  collections. 

In  a  prominent  organization,  based  upon  functional 
principles,  the  credit  manager  is  one  of  the  stafT  of 
functional  managers  reporting  directly  to  the  president. 
He  is  assisted  by  the  credit  men  in  the  various  branches 
operated  by  the  company.  He  is  distinct  from  the 
manager  of  finances.  The  organization  of  the  credit 
department  of  this  concern  is  shown  below : 


MANAGER  CREDITS 


Credit  Auditor 

I  I  I — : 


Special  Auditor 


Branch  Auditor 


Footwear 
Branch 
Audits 


Branch  Credit  Manager 


Tire 
Branch 
Audits 


Branch 

Credit 


Adjuster  of 
Accounts 


Jobber 
Credit 


Export 
Credit 


Questio?i 
Under  what  conditions  is  this  organization  practical? 


SALES  ORGANIZATION  127 

Problem  59 
Coordination  of  Sales  and  Production  Departments 

Not  infrequently,  manufacturing  enterprises  have 
been  involved  in  serious  difficulties  because  of  lack  of 
coordination  of  sales  and  production.  This  coordina- 
tion must  rest  upon  a  satisfactory  adjustment  of  sales 
and  manufacturing  effort,  so  that  the  product  sold  is 
satisfactory  both  in  quality  and  quantity.  There  must 
be  clear  recognition  on  the  part  of  the  sales  department 
of  the  advantages  of  mass  production.  On  the  other 
hand,  the  attempt  of  the  production  department  to  dic- 
tate to  the  sales  department  overlooks  the  obvious 
advantage  the  sales  department  possesses  in  enlarging 
market  demand. 

The  Morgan  Company,  with  plants  in  Newark  and 
Buffalo,  manufactures  drop-forgings.  Manufacturing 
is  in  charge  of  a  vice-president  under  whom  are  the 
works  managers.  The  distribution  of  the  products  is 
handled  through  the  central  organization  in  Newark  by 
the  vice-president  in  charge  of  sales.  Due  to  the  fact 
that  both  officials  possess  strong  personalities,  there 
has  been  considerable  friction  between  the  production 
and  sales  departments.  In  the  fall  of  1920,  when  profits 
dropped  and  inventories  seemed  to  pile  up  suddenly,  a 
careful  examination  was  made  of  the  character  of 
inventory.  Analysis  showed  that  for  various  items,  of 
which  six  or  nine  months'  supply  would  have  been 
ample,  there  were  supplies  as  measured  by  the  average 
sales  of  the  preceding  five  years  sufficient  for  many 
years.  The  following  examples  illustrate  a  stock  of  a 
few  sizes  of  drop-forged  wrenches.  These  wrenches 
were  kept  in  stock  in  the  "rough"  (i.  e.,  after  they  had 
been  forged  and  trimmed).  They  were  also  kept  in 
stock  and  sold  in  "unfinished"  condition,  after  under- 
going milling  and  heat  treatment.  Further,  they  were 
stocked  and  sold  in  semi-finished  and  finished  condition, 
which  were  merely  two  grades  of  polishing. 


128        i'ROBLl!:MS  IX  SALES  MANAGEMENT 


Item 


Siii)ply  of 
Unfinished 


^  Sui)i)ly  of 
Scnii-finislio 


Supply   of 
Finished 


No. 

145 

None 

IS 

mouths 

G 

months 

No. 

146 

19   years 

1 

months 

3 

months 

No. 

147 

5   years 

10 

months 

(> 

months 

No. 

148 

2   years 

5 

months 

18 

months 

No. 

149 

33^  years 

1 

years 

2M 

years 

No. 

150 

32M  years 

1^ 

i  years 

2 

years 

No. 

151 

Sn   years 

7 

years 

() 

months 

The  ordering  of  these  wrenches  was  in  the  hands  of  a 
middle-aged  man  who  had  been  in  the  employ  of  the 
company  for  10  years  or  more.  He  had  a  good  mem- 
ory and  was  thoroughly  familiar  with  all  the  details 
in  regard  to  the  sales  and  manufacturing.  Though  he 
kept  records  in  various  books,  which  were  so  com- 
plicated that  they  were  always  a  month  or  two  behind, 
the  placing  of  orders  was  based  on  his  memory  and 
judgment.  In  some  cases  in  the  past,  the  stock  of  a 
certain  wrench  had  been  exhausted  and  had  been 
brought  to  the  attention  of  the  manager  by  the  sales 
department.  The  manager  had  brought  this  man  up 
on  the  carpet;  and  when  he  went  back  to  his  desk  he 
had  made  up  his  mind  that  they  would  never  catch  him 
again  on  that  wrench.  Therefore,  he  placed  orders  for 
large  amounts  without  realizing  that  the  usage  of  this 
item  was  decreasing.  This  may  have  been  the  cause 
of  some  of  the  overstocking  of  some  of  the  items.  In 
other  cases  this  man's  judgment  may  have  been  correct 
when  he  placed  an  order,  but  a  new  wrench  which  better 
satisfied  the  needs  of  the  buying  public  was  put  on  the 
market  by  his  own  firm  or  a  competitor,  thus  render- 
ing the  particular  wrench  obsolete. 

Still  another  cause  of  overstocking  was  that  the  fore- 
man of  the  hammers  was  allowed  to  do  very  much  as 
he  pleased.  If  an  order  was  placed  for  5,000  wrenches 
and  he  found  on  completion  of  the  5,000  that  he  had 
enough  bar  stock  on  hand  to  make  2,000  more,  he 
would  go  ahead  and  forge  them  in  order  to  clean  up 


SALES  ORGANIZATION  129 

the  odd  lots  of  bar  stock.  Of  course,  he  knew  nothing 
about  the  usage  of  these  wrenches. 

A  Httle  study  showed  clearly  that  the  economies 
realized  by  the  foremen  through  economical  runs  were 
much  more  than  offset  by  the  expense  of  storage, 
interest,  insurance,  and  depreciation  which  must  be 
carried  in  these  items  at  a  time  when  there  were  many 
other  demands  for  this  capital.  While  the  unusually 
strong  financial  position  of  this  company  will  probably 
enable  it  to  stand  the  strain,  the  board  of  directors  has 
determined  that  some  arrangement  must  be  made 
whereby  reasonable  coordination  of  sales  and  produc- 
tion will  be  secured. 

They  realize  that  the  organization  should  adopt  cer- 
tain measures  to  reorganize  the  stores  system,  but 
they  feel  that  the  necessity  for  coordination  should  be 
emphasized  also  by  a  change  in  organization  directed 
toward  filling  the  gap  between  production  and  sales 
departments.     Two  suggestions  are  offered: 

(1)  The  appointment  of  a  coordinating  official,  who 
may  be  a  merchandising  manager  having  charge  of 
specific  stocks  or  lines,  getting  contact  with  the  sales 
department  through  meetings  with  sales  officials  and 
through  actual  contact  with  customers  on  the  road;  in 
other  words,  a  man  who  shall  have  charge  of  stocks  and 
approve  all  orders  involving  increase  in  stock  or  change 
in  specifications  from  standards  adopted.  The  presi- 
dent suggests,  however,  that  this  coordinating  official 
be  made  a  staff  assistant  to  the  president,  reporting 
directly  to  him,  and  transmitting  orders  as  orders  of 
the  president  to  the  officials  concerned. 

(2)  That  increase  of  stock  limits  and  changes  in 
specifications  or  addition  of  new  products  be  made  sub- 
ject to  committee  decision,  the  committee  to  consist  of 
the  production  manager  and  superintendent,  the  presi- 
dent, and  the  sales  manager. 

Questions 

1.  Which  plan  is  preferable? 

2.  What  other  measures  are  required  to  bring  about 
a  healthy  condition? 


l;U)        PKOJiLKMS  IN  SALES  MANAGEMENT 

I'ltOHLEM    ()() 
U ELATION  OK  TuAl'FK:  DliPARTMENT  TO 

Sales  Organization 

In  concerns  which  have  traffic  departments  there 
frequently  arises  the  question  of  organization  as  to 
whether  the  traffic  deimrtment  is  to  be  subordinated  to 
the  sales  department,  to  the  purchasing  department,  or 
otherwise  disposed  of.  In  business  organizations, 
examples  can  be  found  of  all  methods. 

The  Bowman  Compan,y,  manufacturing  pipe  fittings, 
pipe  wrenches,  threading  tools,  and  valves,  maintains  a 
traffic  department  nominally  under  the  direct  control 
of  the  president,  but  actually  reporting  to  the  vice- 
president  in  charge  of  sales.  It  assists  the  purchasing 
department  in  tracing  shipments. 

The  Brownlee  concern,  manufacturing  engine  lathes 
and  metal  planers,  has  simply  a  shipping  department 
subordinate  to  the  office  manager,  who  in  authority  is 
subordinate  to  the  treasurer  and  coordinate  with  the 
sales  manager. 

The  Matheson  Company  maintains  a  traffic  manager 
reporting  to  the  sales  manager  in  connection  with  out- 
ward shipments  and  to  the  purchasing  agent  in  con- 
nection with  most  inward  shipments. 

A  company  manufacturing  electrical  heating  devices 
has  the  following  officers  reporting  to  the  general  man- 
ager: sales  manager,  chief  engineer,  chief  accountant, 
chief  nurse,  production  superintendent,  purchasing 
agent,  order-department  clerk,  chief  inspector.  It  is 
to  be  noted  that  packing  and  shipping  are  placed  under 
the  order  department,  which  reports  independently  of 
the  sales  manager  or  purchasing  agent  directly  to  the 
general  manager.  In  this  concern,  the  head  of  the 
order  department,  who  has  been  acting  as  traffic 
manager  in  addition  to  general  direction  of  packing  and 
shipping,  has  resigned  and  opportunity  is  given  for 
reorganization  if  desired.  The  company  has  grown 
large  enough  so  that  it  might  be  possible  to  establish  a 
traffic  department,  if  it  seemed  necessary,  or  to  assign 
to  a  reorganized  order  department  a  man  with  some 


SALES  ORGANIZATION  131 

training  in  traffic  management.  The  product  is  sold 
to  dealers  and  through  electric  light  companies  all  over 
the  country. 

While  legally  most  companies  relinquish  liability  on 
goods  after  securing  a  bill  of  lading,  many  concerns 
undertake  to  handle  such  claims  for  customers  upon 
receipt  of  proper  vouchers. 

Questions 

1.  Should  the  handling  of  these  claims  be  the  work 
of  the  traffic  manager  or  of  the  individuals  in  the  sales 
department  who  ordinarily  handle  claims  and  adjust- 
ments of  other  types? 

2.  Should  the  traffic  manager  be  controlled  by  the 
sales  department,  the  production  department,  or  be 
otherwise  placed  in  an  organization? 


PART  III 
SALES  PLANNING  AND  RESEARCH 


PART  III 

SALES  PLANNING  AND  RESEARCH 

OUTLINE 

A.  Sales  Research  and  Sales  Planning. 

1.  Scope  of  research. 

(a)  Adaptation  to  iiulividiial  enterprise. 

2.  Methods  of  research 

(a)   Desk  versus  field  research. 
(6)   Sources  of  information. 

3.  Sales  research   as   a   basis   for  major   and   minor 

policies. 

B.  Research  and  Analysis  of  Products. 

1.  Analysis  of  present  products  as  to  quality,  dur- 

abihty,   style,   uses,   trade-,   and   consumer   re- 
actions. 

2.  Analysis  and  selection  of  selling  jioints. 

3.  Selection  of  styles  or    models   through   addition, 

elimination,  or  change. 

4.  Standardization  of  products  and  styles. 

5.  Seasonal  factors  affecting  product. 

6.  Selection  of  products  to  offset  seasonal  demand 

variation. 

7.  Research   and   analysis   of   competitive    products 

and  substitutes. 

8.  Planning  of  containers  and  methods  of  packing. 

C.  Market  Research  and  Analysis — Demand. 

1.  Actual  and  potential  demand  for  product. 

(a)   Volume,  location,  and  nature  of  demand. 

2.  Stability  of  demand. 

(a)   Economic,  financial,  seasonal,  and  other  fac- 
tors affecting  demand. 

3.  Extent  and  nature  of  competition  in  its  influence 

upon  demand. 

4.  Requirements   for   satisfaction    of   demand    with 

respect  to  delivery. 

135 


13()        PROBLEMS  IN  SALES  MANAGEMENT 

I).     Maukkt    Keseauch    and    Analysis — Reaching    the 
Market. 

1.  riiaiinols  of  distribution. 

(a)  .Vnalysis  of  i)resent    i)r:ictices;     advantages 

and  disadvaiitapios. 

(b)  Sclliiit!;  direct  vci-sus  selling  thiougli  iniddle- 

nu'ti. 

(c)  Dcterniinatioii     of     tyjx's    of    distributors 

rcqinrcd. 

2.  Research  and  analysis  of  data  to  determine  pros- 

pective   consumers,    prospective    retailers,   job- 
bers, or  other  sales  agencies. 

3.  Correlation  of  personal  salesmanship  and  advertis- 

ing. 
(a)  (choice  of  methods  in  effective  combinations 
of  personal  salesmanship  andadvertising. 

E.  Research  and  Planning  in  Management  of  Sales 

Force. 

1.  Districting  of  sales  territories, 

(a)  Basis  for  laying  out  districts. 

(b)  Methods  of  planning  sales  territories. 

2.  Assignment  of  quotas  for  sales  districts  and  sales- 

men. 
8.  Routing  sal(\smen. 

4.  Planning  of  equipment  for  salesmen. 

5.  The  sales  manual;   purpose,  content,  preparation. 

6.  Planning  methods  of  stimulation. 

(a)  Sales  contests. 

(b)  Sales  conventions. 

7.  Planning  methods  of  control. 

(a)  Report  methods;  home-office  records. 

(b)  Control  of  branch  manager. 

(c)  Control  of  salesmen. 

F.  Research  and  Planning  in  Advertising. 

1.  Planning  of  advertising  campaign. 

2.  Planning  dealer  helps. 

(a)   Cooperative   advertising  with  dealers  and 
agents. 

3.  Planning   catalog   and    other   product   literature. 

4.  Planning  exhiljits. 

G.  Planning  and  Scheduling  Orders  and  Deliveries 

TO  Secure  Coordination  of  Sales  and  Production. 

H.     Planning  a  Complete  Sales  Campaign. 
L  Elements  of  complete  sales  campaign. 
2.  Coordination   of   plans   for   constituent   parts   of 
campaign. 


SALES  PLANNING  AND  RESEARCH  137 

GENERAL  QUESTIONS* 

A.  Sales  Research  and  Sales  Planning. 

Is  sales  research  possible  for  the  small  enterprise?  How 
can  the  small  enterprise  get  facts  upon  which  to  base  its 
policies  and  operations? 

To  what  extent  is  it  advisable  to  make  appropriations  for 
sales  research?  Are  the  results  of  sales  research  of  suffi- 
cient value  to  a  business  concern  to  warrant  maintenance 
of  research  department  with  field  investigators?  When 
and  to  what  extent  should  indept^ident  investigators  be 
utilized? 

What  type  of  information  can  be  secured  through  desk 
research?  What  are  the  limitations  of  desk  or  library 
research?  What  are  the  sources  of  information  for  all 
industries;  for  particular  industries?  When  should  the 
questionnaire  be  used?  How  should  the  questionnaire  be 
formulated? 

When  should  field  research  be  used?  What  are  its 
advantages  and  disadvantages?  What  should  be  the 
qualifications  and  characteristics  of  field  investigators? 
How  can  the  results  of  research  be  tested  for  accuracy? 

B.  Research  and  Analysis  of  Products. 

How  can  the  manufacturer  test  his  products  as  to  quality 
and  durability?  How  can  the  manufacturer  learn  all  the 
uses  of  a  particular  product  so  as  to  increase  the  field  of 
demand? 

How  is  the  manufacturer  to  learn  the  reaction  of  dealers 
and  consumers  toward  quality,  durability,  and  style  of 
the  product,  except  as  reflected  in  sales? 

How  arc  the  selling  points  for  a  product  to  be  deter- 
mined?    Which  are  to  be  selected  for  emphasis? 

What  information  is  needed  to  determine  the  policy  as 
to  selection  of  styles  or  models,  and  where  is  this  informa- 
tion to  be  secured? 

How  can  research  and  analysis  assist  in  determining  the 
effects  of  standardization  of  products  and  styles  upon 
sales? 

What  information  is  needed  to  determine  methods  of 
offsetting  seasonal  variations  of  demand? 

How  are  containers  and  methods  of  packing  to  be 
planned? 


i:W        PROBLEMS  IN  SALES  MANAGEMENT 

C.  Market  Research  and  Analysis — Demand. 

What  is  the  uclual  and  potential  tlcniand  for  tlie  product 
as  to  voluin{>  of  dcinand,  location  of  buyers,  and  elasticity 
of  dcinand? 

Is  the  demand  stable  or  is  it  affected  by  financial, 
seasonal,  or  oilier  factors? 

What  are  tlie  extent  and  nature  of  competition? 

What  are  the  requirements  for  the  satisfaction  of  rlcmand 
with  respect,  to  delivery? 

D.  Market  Research    and    Analysis — Reaching 

THE  Market. 

How  are  present  distribution  practices  for  particular 
products  to  be  determined? 

What  data  are  required  for  determination  of  policy  as  to 
sale  through  middlemen?  How  are  data  concerning 
prospective  consumers  to  be  secured? 

How  is  a  manufacturer  to  obtain  detailed  information  as 
to  retailers,  joljbers,  and  other  sales  agencies  which  are 
to  handle  his  product? 

E.  Research  and  Planning  in  the  Management 

OF  THE  Sales  Force. 

How  should  sales  districts  be  laid  out?  What  should 
determine  the  number  of  sales  districts?  What  con- 
siderations affect  the  division  of  sales  territories? 

With  a  given  number  of  salesmen  and  a  given  number  of 
customers,  how  are  salesmen  to  be  routed? 

Should  quotas  for  sales  be  assigned  to  salesmen  or  to 
sales  districts  established  for  the  business  as  a  whole? 
If  so,  what  should  be  the  basis  of  assignment  of  quotas 
to  districts?  Plow  should  quotas  be  made  up  for  sales- 
men? 

What  equipment  is  necessary  for  salesmen?  How 
should  it  be  planned? 

What  is  the  purpose  of  the  sales  manual?  What  should 
be  its  content?  Should  a  standard  sales  talk  and  demon- 
stration be  included?  How  should  the  sales  manual  be 
prepared? 

What  planning  is  necessary  for  sales  contests? 


SALES  PLANNING  AND  RESEARCH  139 

To  what  extent  is  planning  necessary  for  sales  conven- 
tions? How  are  reports  and  methods  of  control  of 
salesmen,  branch  managers  and  other  officials  to  be 
planned? 

F.  Research  and  Planning  in  Advertising. 

How  can  an  advertising  campaign  be  planned?  To  what 
extent  is  this  planning  the  function  of  the  sales  depart- 
ment; to  what  extent  that  of  the  advertising  agency,  in 
cases  where  the  preparation  of  copy  and  management  of 
space  are  not  handled  by  the  concern  itself? 

What  planning  is  necessary  to  secure  the  best  results 
from  dealer  helps? 

How  can  planning  be  applied  to  the  preparation  of 
catalogs  and  other  product  literature? 

G.  Planning   and   Scheduling   Orders   and    De- 

liveries TO  Secure  Coordination  of  Sales 
AND  Production. 

How  may  planning  and  scheduling  be  applied  to  orders 
and  deliveries  so  as  to  bring  about  coordination  of  sales 
and  production? 

To  what  extent  can  Taylor  methods  be  applied? 

H.     Planning  a  Complete  Sales  Campaign. 

What  are  the  elements  of  a  complete  sales  campaign? 

How  should  a  sales  campaign  for  a  given  product  be 
planned? 

How  are  periodical  advertising,  dealer  helps,  and  personal 
salesmanship  to  be  correlated  and  coordinated  in  a  sales 
campaign? 

What  research  is  necessary  to  provide  a  basis  for  an 
intensive  selling  campaign? 

*For  information  upon  research  and  planning  as  applied  to  sales, 
cf.  C.  S.  Duncan,  Commercial  Research,  Macmillan  Company;  J.  G. 
Frederick,  Business  Research  ami  Statistics,  Appleton;  J.  G.  Frederick, 
Modern  Sales  Management,  Appleton;  J.  G.  Jones,  Salesmanshi-p  and 
Sales  Management,  Alexander  Hamilton  Institute;  M.  T.  Copeland, 
Business  Statistics,  Harvard  University  Press,  Chapters  II,  III,  and  V; 
A.  W.  Shaw  Company,  Selling  Series,  Graphical  and  Statistical  Sales 
Helps;  Bulletins  of  the  Taylor  Society,  December,  1920,  and  April, 
1921.  Since  much  of  the  material  in  sales  research  and  planning  is  of 
a  statistical  nature,  the  general  works  upon  statistical  method  will  be 
found  helpful.  Among  these  may  be  mentioned  Horace  Secrist, 
Statistics  in  Business,  McGraw-Hill  Company;  Horace  Secrist,  An 
Introduction  to  Statistical  Methods,  Macmillan;  W.  I.  King,  Elements  of 


IK)       PROBLEMS  IN  SALES  MANAGEMENT 

Problem  61 
ScopK  OF  Sales  Reseakch  and  Planning 

The  special  committee  of  the  Taylor  Society  upon 
Organization  and  Functions  of  a  Sales  Kngineering 
Department  advocated  in  its  report  the  recognition  of 
the  "sales  engineering"  functions  as  distinguished  from 
sales  operation.  Briefly  sunnnarized,  it  was  declared 
that  as  a  field  research  function  sales  engineering  might 
render  service  in  determining  the  addition  or  elimi- 
nation of  products,  changes,  standardization,  present 
and  new  uses,  seasonal  and  territorial  factors,  trade 
reactions,  and  competitive  products. 

In  discussing  technical  assistance  offered  by  sales 
engineering,  the  committee  reports  as  follows* : 

The  range  of  research  and  other  activities  involved  in 
sales  engineering  is  indicated  by  the  following  synopsis;  it 
is  possible  tliat  in  a  largo  oi'ganization  some  of  them  may 
assume  such  importance  as  to  be  recognized  as  separate 
functions: 

Products  : 
Types  and  Sizes  Markings 

Selection  Selection 

Standardization  Standardization 

Approval  Approval 

Finishes  Packing 

Suggestion  Wrapping 

Standardization  Put-ups 

Approval  Containers 

Suggestion 

Standardization 

Approval 

Statistical  Method,  Macmillan;  Tipper,  Hollingworth,  Hotchkiss  and 
Parsons,  Advertising:  Its  Principles  and  Practice,  Ronald  Press  Com- 
pany. The  Dartncll  Corporation  has  issued  reports  upon  fixing  sales- 
men's quotas  and  upon  the  preparation  of  sales  manuals;  Modern  Sales 
Organization,  published  by  the  Dartiiell  Corporation,  also  contains  a 
discussion  of  districting  of  sales  territory.  Among  the  more  general 
works,  cf.  C.  S.  Duncan,  Marketing:  Its  Problems  and  Methods,  D. 
Appleton  &  Company,  Chapters  XIII,  XIV,  and  XV.  Numerous 
articles  dealing  with  sales  planning  and  sales  research  are  to  be  found  in 
Printers'  Ink,  System,  Sales  Mnnagement,  Sales  Manager,  Advertising 
and  Selling.     For  partial  list  of  titles  see  Bibliography. 

•Bulletin  of  the  Taylor  Societrj,  December  1920,  Vol.  V,  No.  6,  p.  236. 


SALES  PLANNING  AND  RESEARCH 


141 


Advertising: 


Furnish  data  on 
New  products 
Product  changes 
New  uses 
New  markets 
Trade  reactions 


Prices  and  Margins 

Salesmen's  Compensation 
Investigation   of   meth- 
ods in  practice 
Suggestions  for  alter- 
native methods 

Selling  Equipment 
Salesmen's 

Design  or  selection 
Dealers' 

Suggestion 

Design 

Seasonal  Factors 


Competitors'  activities 

Prices 

Trade  customs 

Seasonal  factors 

Territorial  factors 


Selling: 

Territorial  Factors 

Determine   limits   and 

causes  therefor 
Suggest   methods   of 
overcoming 

Trade  Resistance 

Determine  causes 
Suggest   methods   of 
overcoming 

Economic  Factors  or  Trends 
Ascertain 

Report  probable   in- 
fluence 
Suggest  methods  of  over- 
coming 


Sales  Service: 

Ascertain  deficiencies  Markets  or  Sales  Fields: 

Report  changes 
Discover  new  markets 
Suggest  new  policies  or 


Suggest  remedies 


Suggest  other  service  activi- 
ties 


methods 


Competitors'  Activities: 

Watch  and  report  Suggest  methods  of  combat- 

ing 

Trade  Organizations: 


Report  activities 

Report   probable   effect   on 
sales  policies 


Determine    possibilities    of 
cooperation 


Legislation: 
Watch  and  report  Suggest  necessary  action 


142       PROBLEMS  IN  SALES  MANAGEMENT 

Mkrchandise  Stocks: 
Regularly  ciuM-k  and  roport       SuRgost  necessary  actions 

Patknts  and  Copyrights: 
Watch  and  report  Suggest  necessary  actions 

Statistics: 
Suggest  necessary  conipila-      Interpret  and  suggest  neces- 

tions  sary  action 

Analyze  and  report  changes 

or  trends 

Complaints: 
Analyze  Suggest  necessary  action 

Compile  records 

Lastly,  it  is  asserted  that  sales  engineering  should 
become  the  coordinating  function  of  the  entire  business, 
including  in  part  the  activities  of  planning  types,  sizes, 
materials,  finishes  and  packing  for  new  products,  plan- 
ning and  scheduling  production  requirements,  market- 
ing policies  and  methods,  sales  service,  advertising 
policy,  and  physical  distribution  of  goods. 

Questions 

1.  Which  activities  require  field  work  in  order  to 
obtain  results  of  value? 

2.  WT:iich  activities  are  possible  for  the  small  organi- 
zation? 


SALES  PLANNING  AND  RESEARCH  143 

Problem  62 
Sources  of  Information 

The  following  brief  list  of  printed  sources  of  business 
and  statistical  information  and  analysis  contains 
material  which  may  be  of  use  to  the  sales  department, 
either  in  determining  major  policies  or  in  detailed  plan- 
ning and  analysis  for  the  execution  of  master  plans. 
Become  acquainted  with  each  one  of  the  sources, 
show  in  each  case  the  specific  use  or  lack  of  usefulness 
for  the  sales  department  of: 

(a)  National  Aniline  &  Chemical  Company; 

(b)  Robert  H.  Ingersoll  &  Brother; 

(c)  Allis-Chalmers  Manufacturing  Company; 

(d)  W.  K.  Kellogg  Company; 

(e)  Goodyear  Tire  &  Rubber  Company; 

(f)  Other  concerns  in  which  you  are  interested. 

In  each  case,  secure  information  as  to  the  size  of  the 
company  and  the  general  character  of  its  business 
from  Moody's  Manual  or  other  sources. 

Reports  of  organizations  which  compile  and  analyze  cur- 
rent statistical  and  business  data  to  determine  trend  of 
business: 

Harvard  Committee  on  Economic  Research,  Babson 
Statistical  Organization,  etc. 

Trade  directories. 

City  directories. 

Trade  periodicals. 

Newspapers. 

Reports  of  trade  associations. 

F.  W.  Dodge  &  Company's  reports. 

Publications  of  the  Department  of  Commerce. 

Statistical  reports  by  the  Department  of  Agriculture. 

Federal  Reserve  Bulletin. 

Dun's  and  Bradstreet's  reports. 


144        PROBLEMS  IN  SALES  MANAGEMENT 

Problem  G3 
Control  of  Advertising 

The  Hartney  Shoe  Manufacturing  Company  manu- 
factures women's  and  misses'  turns  and  welts.  The 
capacity  of  the  factory  is  approximately  12,000  pairs  of 
shoes  per  day.  The  company  distributes  its  product 
through  20  retail  stores  which  it  owns  and  operates 
and  through  a  number  of  exclusive  agencies  in  towns 
having  a  population  of  5,000  and  over.  Eighty  per 
cent  of  its  (nitput  is  sold  through  the  above  channels 
and  the  balance  to  larger  indi\idual  buyers,  such  as 
department  stores  and  chain  store  companies.  Of  the 
sales  to  its  exclusive  agencies  and  owned  stores,  60% 
are  to  its  exclusive  agents. 

On  June  1,  1918,  the  executives  of  the  Hartney  Shoe 
Manufacturing  Company  decided  to  discontinue  their 
advertising  department  and  have  their  advertising 
handled  entirely  by  the  S.  B.  Warren  Advertising 
Agency.  The  window  displays  and  cuts  were  to  be  dis- 
tributed by  the  Hartney  Shoe  Company  under  the 
supervision  of  the  sales  manager.  On  August  1,  1918, 
it  was  decided  to  start  an  advertising  campaign.  One 
feature  of  this  campaign  was  to  be  a  comparison  of  the 
rate  of  stock-turn  for  their  shoes  with  the  rate  for  the 
other  lines  carried  by  their  agents.  The  demand  that 
existed  among  the  individual  consumers  for  their  prod- 
uct as  compared  with  the  demand  for  the  other  lines 
was  also  to  be  shown.  The  Hartney  Company  decided 
that  to  obtain  the  information  needed  for  these  fea- 
tures it  would  be  necessary  to  send  out  field  agents  and 
to  mail  questionnaires  to  its  agencies. 

After  the  plans  for  this  research  were  fornmlated,  the 
S.  B.  Warren  Company  stated  that  they  would  mail 
the  questionnaires  and  have  the  field  work  done  by 
their  representatives;  that  the  results  would  be  com- 
piled in  their  office  and  submitted  to  the  executives  of 
the  Hartney  Shoe  Manufacturing  Company  for  their 
consideration  before  the  advertising  copj^  was  approved. 

Question 
Should  the  executives  of  the  Hartney  Shoe  Manufac- 
turing   Company    have    endeavored    to    install    any 
method  of  controlling  this  research  work? 


SALES  PLANNING  AND  RESEARCH  145 

Problem  64 
Desk  Versus  Field  Research 

A  definite  problem,  which  frequently  confronts  a 
company  manufacturing  a  large  line  of  products,  is  to 
ascertain  the  causes  for  the  slump  in  sales  of  any  partic- 
ular line.*  A  paint-manufacturing  company,  with 
thousands  of  articles  in  its  line,  has  for  many  years 
used  paid  investigators  for  the  purpose  of  making  its 
more  general  investigations  upon  which  changes  in 
sales  policy  and  sales  plans  are  based.  To  check  up 
certain  sales  plans  the  trained  investigator  is  sent  out 
to  customers  to  secure  answers  to  the  following  ques- 
tionnaire: 

What  brands  of  — sell? 

Why? 

Did  you  make  comparative  tests? 

Yearly  sales? 

Who  sells  most in  town? 

Brand? 

Percentage  to  painters? 

Percentage  to  home-owners? 

What  percentage  ask  for by  name? 

What  percentage  without  name? 

What  do  you  sell  them? 

Do  large  painters  who  use buy  direct? 

Do  you  sell  the  large  painters  who  use  the ? 

Is  high-grade sold  in  small  cans? 

Is  there  much  demand  for  high-class in  cities  such 

as  this?     Is  demand  increasing? 

Why  is so  popular? 

Price? 

Discount? 

Service? 

From  whom  do  you  buy? 

Is  price  of  our  competitive  material  right? 

What  do  trade  saj^  about  it? 

Were  you  in  our  position,  what  would  you  do  to  get 
business? 

*Cf.  also  Printers'  Ink,  October  25,  1917. 


146       PROBLEMS  IN  SALES  MANAGEMENT 

How  would  you  advertise  our  product? 

To  what  class  would  you  make  the  strongest  appeal? 

Architect?     Merchant?     Painter?     Home-owner? 

What  percentage specified? 

Brands? 

What  is  feature  most  demanded — working  or  durability? 

Does  painter  follow  specifications? 

Why  have  you  never  sold  or  used ? 

What  kind  of  proposition  would  appeal  to  you? 
If  jobber,  exclusive  territory? 

On  your  total business,  what  percentage  ask  for 

first-grade,  second-grade,  and  third-grade? 

Questions 

1.  Is  the  information  here  requested  sufficiently 
valuable  to  warrant  the  expenditure  necessary  to  make 
personal  investigations  in  towns  which  may  be  con- 
sidered typical? 

2.  How  much  of  the  information  could  be  obtained 
without  field  work? 

3.  Assuming  that  the  slump  in  sales  was  noticeable 
over  the  major  portion  of  the  United  States,  how 
should  one  get  first-hand  information? 


Problem  65 
Use  of  Questionnaire* 

The  salesmen  of  a  tin  and  enameled-ware  concern 
were  asked  to  fill  out  a  questionnaire  for  each  merchant 
visited.    The  questions  were  as  follows: 

(1)  Get  list  of  trade-papers  dealer  subscribes  for. 

(2)  Find  out  which  trade-paper  he  prefers. 

(3)  Find  out  what  feature  of  trade-papers  is  of  most 
benefit  or  interest  to  him. 

*From  Printers'  Ink,  May  18,  1916. 


SALES  PLANNING  AND  RESEARCH  147 

(4)  Find  out  if  they  read  trade-paper  advertising. 

(5)  Find  out  if  they  ever  order  goods  direct  as  result  of 
trade-paper  advertising. 

(6)  Find  out  how  dealer  feels  toward  houses  who  sell 
catalog  house. 

(7)  Find  out  dealer's  attitude  toward  parcel-post. 

(8)  Find  out  what  dealer  is  doing  to  overcome  catalog- 
house  competition. 

(9)  Find  out  if  dealer  derives  his  trade  in  our  line  from 
middle-class  women;  if  not,  what  class. 

(10)  Find  out  talking  points  which  dealer  uses  in  pre- 
senting our  line  to  his  trade. 

(11)  Find  out  if  dealer  marks  goods  in  plain  prices  or 
blind  figures. 

(12)  Find  out  if  dealers  keep  their  stock  well  swept  and 
dusted. 

(13)  Find  out  system  dealer  has  of  marking  goods;  does 
he  tag  them  or  mark  with  crayon? 

(14)  Find  out'  number   of   clerks   dealer   employs   and 
about  what  he  paj^s  them. 

(15)  Find  out  amount  of  stock  in  all  lines  which  dealer 
carries. 

(16)  Find  out  amount  in   tinware   and  enameled-ware 
line. 

(17)  Find  out  if  dealer  takes  inventory  once  a  year. 

(18)  Find  out  if  dealer  ever  has  sales  for  closing  out 
dead  stock. 

(19)  Find  out  if  dealers  who  take  inventory  count  in 
dead  stock  at  purchased  value. 

(20)  Find  out  what  distribution Ware  has. 

(21)  See   what  competitors    are    doing   in    the    way  of 
advertising. 

(22)  See  what  prices  our  competitors  are  making. 

(23)  See  what  new  improvements  our  competitors  are 
putting  on  their  goods. 

(24)  Find  out  if  dealer  has  ever  done  any  advertising  of 
any  kind. 

(25)  Investigate  crop  conditions  and  see  effect  on  deal- 
er's business. 

(26)  Secure,  as  far  as  possible,  copies  of  previous  adver- 
tising done  by  dealer. 

(27)  Find  out  if  dealer  distributes  direct  literature  to 
customers  and  prospective  customers. 


148        PROBLEMS  IN  SALES  MANAGEMENT 

(28)  Find  out  if  doalor  has  inailinfj;-list  to  whom  he 
sends  advcrtisinp;  Htcratuic  rcfrdlarly. 

(29)  Find  out  if  dealer  has  special  sales  on  any  lines  of 
merchandise. 

(30)  Find  out  if  dealer  prefers  l)U>'in}i  direct  from 
manufacturer  or  through  jobber. 

(31)  See  if  dealer  Ixdieves  in  window  tiiiuminj^  and  does 
he  have  anyone  especially  fitted  for  work. 

(32)  Find  out  if  dealer  reads  advertising;  matter  sent 
him  or  throws  it  into  waste-basket. 

(33)  Find  out,  if  possible,  average  number  of  letters 
and  circulars  received  per  day  by  dealer. 

(34)  Collect  all  literature  you  can,  which  is  sent  to 
dealers  by  manufacturers  of  every  line  and  send  it  in  to  us. 

(35)  Take  pictures  of  good  window  trim,  store  arrange- 
ments and  crowds  which  gather  around  tlie  store  when  they 
are  putting  on  special  sale. 

(36)  Find  out  percentage  of  profit  which  dealer  takes 
on  his  g;oods. 

(37)  Find  out  dealer's  expense  foi-  doing  business  and 
percentage  over  this  amount  which  he  figures  he  ought  to 
make. 

(38)  Find  out  whether  or  not  he  runs  delivery  wagon. 

(39)  Find  out  whether  or  not  he  has  telephone  and,  if 
so,  does  he  get  much  business  over  the  phone. 

(40)  Find  out  whether  dealer  uses  phone  for  soliciting 
business. 

(41)  Find  out  class  of  people  living  in  each  locality, 
their  source  of  income,  etc. 

(42)  Find  out  number  of  rural  free  delivery  routes  out 
of  each  town. 

(43)  Find  out  whether  or  not  people  of  community  are 
mail-order  buj-ers. 

(44)  Find  out  what  color  of  enameled-ware  housewife 
prefers. 

(45)  Find  out  exactly  how  housewife  asks  for  article  in 
our  line — by  name  of  line,  by  utensil,  })y  size  of  utensil,  or 
how. 

(46)  Find  out  from  women  customers  of  store  what  kind 
of  advertising  appeals  to  them — an  offer  of  something  for 
nothing,  display  of  price,  advertising  of  seasonable  articles, 
appeal  to  vanity,  to  sense  of  utility,  or  to  pocketbook. 

(47)  Is  average  hardware  dealer  very  critical  as  to 
quality  of  goods,  particularly  enameled-ware? 


SALES  PLANNING  AND  RESEARCH  149 

(48)  Docs  he  make  claims  for  damage  on  goods  that 
have  been  damaged  in  transit  against  the  R.  R.  company? 

(49)  Is  he  prompt  in  taking  care  of  correspondence  and 
does  he  appreciate  and  insist  upon  prompt  repl}^  to  any  of 
his  letters? 

(50)  Does  he  expect  to  have  his  orders  filled  within  a 
few  days  after  they  are  placed? 

(51)  Does  the  average  hardware  dealer  send  in  very 
many  mail  orders,  or  does  he  prefer  to  give  his  orders  in 
person  to  a  representative? 

(52)  How  often  should  the  manufacturer  have  his 
representative  call  during  the  year  with  a  line  like  ours? 

(53)  Does  he  include  the  freight  which  he  pays  on  a 
shipment  in  his  cost? 

(54)  When  figuring  his  profit,  does  he  figure  this  per- 
centage on  sales  or  on  the  cost  or  on  invoiced  price? 

(55)  Does  he  include  anything  for  loss  due  to  bad 
accounts  when  figuring  expense  of  doing  business? 

(56)  Does  he  devote  any  time  to  educating  clerks  in 
salesmanship? 

(57)  Does  he  work  up  any  sales  schemes  for  increasing 
business? 

(58)  Does  he  check  up  cost  or  invoice  prices  with  other 
prices  quoted  by  competing  manufacturers  of  another  line? 

(59)  Does  he  push  advertised  brands? 

(60)  How  does  the  average  retail  merchant  look  upon 
advertising? 

(61)  Does  the  average  hardware  merchant  pay  very 
much  attention  to  our  particular  line? 

(62)  What  does  the  average  hardware  dealer  give  prefer- 
ence to  in  the  line  that  he  carries?  Particularly  the  fol- 
lowing: builders'  hardware,  furnace  and  hot-water  heating, 
heating  stoves  and  ranges,  cooking  utensils. 

(63)  Does  the  retailer  like  an  f .  o.  b.  destination  price? 

Salesmen  were  equipped  with  cameras  and  required 
to  take  pictures  of  dealers'  stores,  usually  w^ith  staff 
posed  in  front  of  store;  these  pictures  enabled  corre- 
spondents to  write  more  intelligently  to  dealers. 


150        PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  Criticize  the  above  questionnaire  and  instructions. 

(a)  From  viewpoint  of  completeness  and  value  to 
sales  department. 

(6)  As  to  the  ad\isability  of  using  salesmen  as 
investigators. 

(c)  As  to  feasibiUty  of  (luestionnairo  method  in 
this  case. 

2.  When  can  the  questionnaire  be  successfully  used 
by  a  sales  department? 

3.  What  should  be  the  principal  characteristics  of  a 
questionnaire? 


Problem  66 
Adapting  Research  to  Specific  Enterprise 

Questions 
(a)  1.  Would  research  be  advisable  for  the  Auto- 
motive Sales  Company  as  described  in  Problem  325? 

2.  If  so,  what  should  be  its  nature? 

3.  Would  the  expenditure  of  S5,000  for  research 


be  wise'; 


Question 
(6)  With  the  very  limited  resources  of  Mr.  King,  as 
described  in  Problem  18,  is  it  possible  to  adopt  scientific 
methods  of  research? 


SALES  PLANNING  AND  RESEARCH  151 

Problem  67 
Sales  Research  for  Insurance  Company 

A  large  life-insurance  company  has  recently  estab- 
lished a  sales-research  department,  with  a  view  to 
studying  the  problem  of  selling  its  product,  namely,  life 
insurance.  A  letter  of  the  director  states :  "This  study 
will,  of  course,  include  an  analysis  of  the  market  condi- 
tions, present  and  potential  sales,  and  study  of  the 
various  personnel  problems,  remuneration  of  salesmen, 
et  cetera." 

Question 

Assuming  that  no  work  whatever  has  been  done  in 
compiling  information,  with  the  exception  of  meager 
records  as  to  sales  and  information  drawn  from  the 
accounts,  prepare  a  brief  plan  indicating  the  type  of 
information  which  should  be  collected  for  the  benefit 
of  the  insurance  company  and  the  methods  which 
should  be  used  in  getting  that  information. 


Problem  68 

Sales  Research  as  Basis  for  Selling  Problems 

AND  Methods 

The  Duncan  Motor  Truck  Company,  following  the 
example  of  several  manufacturers  of  motor  trucks,  has 
recently  undertaken  to  reorganize  to  some  extent  its 
selling  forces  and  selling  policies  on  what  has  been  called 
"the  vocational  plan."  Briefly,  the  plan  is  to  direct 
selling  effort  not  to  prospective  truck  purchasers  in 
general  but  to  such  purchasers  classified  by  industries 
which  have  essentially  the  same  transportation  prob- 
lems. As  a  part  of  the  plan,  information  which  will 
make  possible  the  most  effective  selection  and  utiliza- 


152        PUOHLKMS  IN  SALES  xMANAGEMP^NT 

tioii  of  motor  trucks  for  oach  industry  is  collected  by 
the  central  research  department  at  the  sales  head- 
quarters. This  information  is  transmitted  in  part  to 
branches,  when  jj;eneral  salesmen  are  asked  to  specialize 
upon  particular  groups  of  industries  which  may  be 
centralized  in  the  district.  In  the  larger  organizations 
and  in  the  larger  centers,  this  is  of  course  possible;  and, 
in  fact,  the  idea  of  studying  the  problems  by  industries 
can  be  carried  out  to  some  extent  even  in  the  small 
organizations. 

Questions 

1.  Assuming  that  the  idea  is  sound,  how  can  the 
central  research  department  of  the  Duncan  Company 
cooperate  with  the  branch  office  or  with  the  dealer  in 
selling  trucks  in  a  particular  territory? 

2.  What  should  be  the  obligations  of  dealers  and 
branches  under  the  plan  proposed? 


Problem  69 
Analysis  of  Product 
A  few  years  ago  Printers  'Ink  published  the  following ; 

/  C  Developed        [By  Education 


PRODUCT 


Demand  . 


SEnVICEABILITV 


Quality 


Developed 
I'lideveloped 
Forced  or 
Natural 
Permanent  or 
Seasonable 


By  Necessity 


Is  it  a  Neccssit}'? 

Is  it  a  Luxury? 

Is  it  a  Convenience? 

Is  it  Durable? 

Is  it  Economical  in  Use? 


Of  Raw  Materials 
Of  Design 
Of  Workmanship 
Of  Appearance 
Of  Finish 


How  Does  it  Compare 
with  Competing 
Articles  on  These 
Items? 


SALES  PLANNING  AND  RESEARCH 


153 


Price  to. 


Jobber 
Broker 
Retailer 
Consumer 


Profit  to. 


Manufacturer 
Jobber 
Broker 
Retailer 


High         [How  Does  it  Corn- 
Medium  -j     pare  with  Com- 
[     pcting  Articles? 
Low 

Larger  than  on  Competr- 

ing  Lines? 
Same   as   on   Competing 

Lines? 
Smaller  than  on  Compet- 
ing Lines? 


PRODUCT 


Officered  by  Old  Men 

Officered  by  Young  Men 

Aggressive 

Lax 

Long-established 

Wealthy 
Competition  .  -i  Limited  Means 

Their  Sales  Plans 

Their  Advertising  Campaign 

Their  Policy  toward  Customers 

Their  Sales  Manager 

Their  Sales  Force 

Their    Credit    Department's    Attitude 
\^  1^      toward  Customers 

Questions 
To  what  extent  can  this  information  be  obtained  by 
means  of 

(a)  Laboratory  tests; 

(6)  Trade  and  consumer  tests; 

(c)  Printed  sources  of  information; 

(d)  Field  investigators? 


Problem  70 
Market  Analysis  for  Felt 

Felt  is  used  as  a  component  part  of  many  finished 
articles  of  manufacture.  Some  of  the  products  in 
which  it  is  used  are  hats,  tailored  clothing,  shoes,  elec- 
tric fixtures,  furniture,  automobiles,  saddles,  harness, 
and  billiard  tables.  This  is  a  very  incomplete  list  of 
the  products  into  which  felt  enters,  the  discovery  of 
new  uses  being  a  matter  of  frequent  occurrence. 


154        PROBLEMS  IN  SALES  MANAGEMENT 

J,  D.  Green,  a  large  felt  manufacturer,  with  sales 
offices  in  New  York,  found  upon  investigation  in  1920 
that  his  sales  force  was  not  reaching  all  types  of  man- 
ufacturers buying  felt,  while  the  new  uses  for  the  prod- 
uct which  were  continually  coming  to  light  often  re- 
mained unknown  to  his  organization  for  some  length 
of  time,  since  he  had  no  systematic  way  of  finding  these 
out.  In  his  distribution  Mr.  Green  went  directly  to 
the  consumer  and  did  not  make  use  of  the  felt  jobber. 
It  was  necessary,  therefore,  that  he  should  learn  and 
seek  out  his  own  customers  and  potential  markets. 

Questions 

1.  What  methods  should  he  have  adopted  to  insure 
reaching  all  types  of  prospects? 

2.  What  means  should  have  been  taken  to  learn  the 
new  uses  of  the  product? 


Problem  71 
Market  Analysis — Analysis  of  Selling  Points 

Mr.  Simmons,  an  engineer  connected  with  a  companj'- 
manufacturing  machine  tools,  has  perfected  outside  of 
business  hours  a  device  for  lubricating  overhead  valves 
in  the  overhead-valve  type  of  motor.  It  has  been  Mr. 
Simmons's  experience  with  his  own  car  that  after  a 
certain  length  of  time  the  valves  in  the  valve-in-head 
type  of  motor  become  somewhat  noisy,  so  that  the 
motor  does  not  seem  to  be  running  so  smoothly  as 
w^hen  new.  This,  he  says,  is  due  partly  to  inadequate 
lubrication  and  partly  to  lack  of  certain  minor  adjust- 
ments. The  latter  trouble  is  easily  remedied,  but 
lubrication  has  furnished  a  problem  for  engineers  for 
many  years.    It  is  estimated  that  the  device  could  be 


SALES  PLANNING  AND  RESEARCH  155 

manufactured  in  quantities  for  about  $15.  However, 
before  capital  is  put  into  the  manufacturing  and  mar- 
keting of  the  product,  the  prospective  investors  desire 
some  assurance,  first,  that  the  product  will  do  what  is 
claimed  for  it;  and  secondly,  that  there  is  a  market  of 
sufficient  size  to  warrant  investment. 

Questions 

1.  What  information  is  needed  to  give  reasonable 
assurance? 

2.  Where  and  how  is  this  information  to  be  secured? 

3.  Assuming  that  it  is  decided  to  sell  the  product, 
how  should  the  seUing  points  of  the  product  be  analyzed 
and 'presented? 


Problem  72 
Analysis  of  Products 

The  Wyman  Company,  located  in  Rochester,  New 
York,  has  for  50  years  carried  on  a  wholesale  business 
in  saddlery.  Its  market  extends  over  New  York  State, 
Vermont,  Pennsylvania,  and  into  Ohio.  Vermont  sales 
are  made  through  a  special  agent. 

The  company  manufactures  on  a  small  scale  a  horse 
collar,  which  is  considered  better  than  competing  prod- 
ucts, because  it  is  so  made  as  to  avoid  the  usual  rough- 
ness in  such  products.  Eight  years  ago,  perceiving  the 
increase  in  the  demand  for  motor  products  and  fearing 
a  decline  in  demand  for  saddlery,  a  line  of  automobile 
accessories  was  added.  At  the  present  time,  the  annual 
sales  of  $500,000  are  divided  about  evenly  between  the 
saddlery  and  automobile  accessories.  Among  the  auto- 
mobile accessories  handled  are  two  leading  brands  of 
nationally  advertised  tires.    The  president  of  the  com- 


\-A\        I'KOHI.KMS  IN  SALES  MANAGEMENT 

pany  is  a  man  of  sixty,  who  desires  to  retire.     He  is 
active  head  of  sales,  controlling  the  eight  salesmen  em- 
ployed by  the  ('oMi|)aiiy  and  the  small  office  organi- 
zation, as  well  as  other  branches  of  the  business. 
Mr.  John  .Monroe  has  been  made  general  manager. 

Questions 

1.  Should  hv  |)lan  to  change  gradually  the  lines  han- 
dled, or  not? 

2.  If  so,  what  changes  should  be  made? 

3.  How  should  he   go   about   determining   in    what 
lines  the  concern  should  specialize? 


Problem  73 

Additiox  of  New  Lines 

The  Urquhart  Manufacturing  Company,  manufac- 
turers of  pipes,  valves,  and  fittings  in  steel,  iron,  brass, 
and  other  metals,  found  late  in  1920  that  by  change  in 
process  of  manufacture  of  a  certain  type  of  valve 
enabling  steel  to  be  used,  approximately  one-half  of 
its  manufacturing  capacity  for  brass  products  formerly 
used  in  this  product  would  remain  idle.  The  LTrquhart 
plant  as  a  whole,  during  the  depression  period,  has  been 
operating  at  a  fraction  of  capacity.  The  manager 
realizes  that  preparations  for  occupying  the  brass  man- 
ufacturing capacity  must  be  made,  either  through  new 
products  or  through  the  increase  in  sale  of  goods 
already  manufactured. 

Question 
List  the  items  of  information  which  should  have  been 
in  the  hands  of  the  managers  in  order  to  determine 
the  new  policy. 


SALES  PLANNING  AND  RESEARCH  157 

Problem  74 

Selection   of   New   Products  to   Eliminate   Seasonal 
Demand  Fluctuation 

The  Dow  Company  manufactures  and  sells  art  nov- 
elties, chiefly  tinsel  merchandise.  It  has  a  number  of 
distinct  problems  resulting  from  the  seasonal  nature  of 
the  business.  Ninety  per  cent  is  Christmas  merchan- 
dise, the  sale  of  which  is  limited  to  four  months  of  the 
year,  while  production  consumes  ten  months.  The 
product  includes  such  articles  as  tinsel  rope  and  string 
and  Christmas-tree  decorations.  An  attractive  line  of 
pottery  is  purchased  and  sold  by  the  company;  it  is 
limited  to  a  few  patterns  and  serves  as  a  gift  in  the 
Christmas  season.  The  company  distributes  over  the 
entire  United  States,  selling  to  wholesalers  and  selected 
retail  accounts.  The  selling  season  is  from  January  to 
May,  the  trade  being  called  upon  as  a  rule  once  a  year, 
except  in  the  larger  cities,  where  two  calls  a  year  are 
made.  Due  to  the  seasonal  nature  of  the  business, 
the  company  has  a  problem  in  recruiting  and  main- 
taining a  sales  force.  Three  executive  members  of  the 
firm  spend  part  of  their  time  in  selling;  in  addition, 
there  are  several  salesmen  devoting  their  full  time  to 
sales  and  seven  salesmen  carrying  the  company's  prod- 
uct as  a  side-line. 

Since  the  selling  period  is  limited  to  four  months, 
the  salesmen  must  find  a  means  of  filling  in  the  other 
months  of  the  year.  In  spite  of  the  irregularity  of  the 
employment,  two  men  have  been  on  the  force  for  ten 
years,  four  for  three  years,  and  another  for  two  years. 
The  men  who  carry  the  product  as  a  side-line,  however, 
change  frequently. 

The  managers  try  to  use  great  care  before  giving 
any  outside  salesmen  the  opportunity  to  represent  the 
company,  because  of  the  expense  of  making  up  sample 
trunks  and  the  danger  of  poor  representation.  Sales- 
men are  paid  upon  a  contract  commission  basis,  approxi- 
mately 15%  upon  goods  shipped.  A  drawing  account 
up  to  75%  of  the  commission  on  sales  is  allowed,  the 
remainder  of  the  salary  being  paid  at  the  end  of  the 


158        PHOHLIOMS  IN  SALES  MANAGEMENT 

year.    The  nianagoment  continually  faces  the  problem 

of  preventing  overdrawinp;  of  accounts  by  salesmen. 

The  officers  of  the  company  feel  that  new  lines  should 

be  added  to  offset  the  seasonal  nature  of  their  business. 

Qjiesiion 
How  should  they  go  about  determining  what  prod- 
ucts to  add  to  their  line? 


Problem  75 
Research  to  Determink  Effect  of  Standard- 
ization OF  Product 

The  Whiteman  Company,  of  St.  Louis,  manufactures 
a  trade-marked  line  of  shoes  for  men,  women,  and 
children.  The  annual  sales  amount  to  some  $15,000,000. 
The  production  manager  has  been  approached  by  the 
superintendent  of  one  of  the  factories  operated  by  the 
company  with  the  proposition  that  his  factory  shall 
specialize  in  the  manufacture  of  a  certain  medium- 
grade  type  of  men's  shoe,  namely,  men's  genuine  Good- 
year welt  in  B-E  widths.  These  are  to  be  made  with 
genuine  chrome  gun-metal  vamps,  chrome  matt  side 
and  top,  and  oak  or  fibre  soles,  only  the  three  most 
popular  lasts  among  staple  lines  to  be  used. 

The  superintendent  has  given  some  thought  to  the 
selling  proposition.  He  claims  that,  since  the  factory 
will  make  only  this  one  type  of  shoe,  and  the  company 
by  virtue  of  its  large  purchases  of  leather  will  secure 
lower  prices  on  raw  materials,  and  provided  shoes  are 
sold  only  in  24-pair  case  lots  to  dealers,  it  will  be 
possible  to  reduce  materially  the  cost  of  production 
and  realize  economies  in  buying,  manufacturing,  and 
selling.  On  paper  the  proposition  seems  good  to  the 
president  of  the  company,  but  he  wishes  to  be  assured 
more  fully  as  to  the  possibility  of  selling  the  large 


SALES  PLANNING  AND  RESEARCH  159 

volume  of  shoes  of  one  type  which  will  be  the  result  of 
such  specialization. 

Question 
What  information  would  be  of  value  to  the  president 
in  arriving  at  a  decision? 


Problem  76 
Elimination  of  Odd  Sizes  and  Styles 

The  Butler  Company  manufactures  office  equipment 
and  is  accustomed  to  carrying  a  stock  of  a  large  number 
of  sizes  of  the  various  kinds ;  ordinarily,  there  are  no  less 
than  4,000  items  in  stock.  Some  of  these  are  in  con- 
stant demand;  others  are  slow  sellers.  Salesmen  are  in 
the  habit  of  stressing  the  ability  of  the  company  to  fill 
all  orders.  If  a  buyer  wants  a  cabinet  of  any  size,  he 
can  have  it.  If  it  is  not  in  stock,  the  manufacturer  is 
quite  willing  to  make  it,  and  the  price  for  the  odd- 
length  cabinet  is  not  out  of  proportion  to  that  asked 
for  the  standard  length.  Though  the  business  is  re- 
garded as  prosperous  and  its  sales  have  increased  from 
year  to  year,  profits  are  not  increasing.  Because  of  this, 
a  change  in  management  has  been  made.  The  new 
manager  recommends  standardization  and  a  material 
decrease  in  the  number  of  items  carried  in  stock.  On 
the  other  hand,  the  salesmen  declare  that  the  business 
of  the  concern  will  fall  ofT  very  considerably  if  the  wants 
of  customers  are  not  satisfied. 

Questions 

1.  What  facts  should  the  sales  manager  use  in  order 
to  support  his  recommendation? 

2.  Where  are  these  to  be  obtained? 

3.  What  action  should  be  taken  on  this  recommen- 
dation?    Give  reasons. 


IGO        I'KOIiLKMS  IN  SALES  MANAGEMENT 

PUOBLEM    77 

Planning  Container 

An  attractive  carton  has  a  distinct  sales  value  apart 
from  the  trade-mark.  Like  a  trade-mark,  the  value  of 
the  pac'kaf2;o  inultii)li('s  with  the  increase  in  sales, 
acquiring  a  prestige  similar  to  that  of  the  trade-name. 
A  poorly  selected  package  may  handicap  to  no  small 
extent  the  sales  of  the  good  commodity;  but  a  package 
that  stimulates  sales,  even  if  only  in  a  small  degree, 
causes  to  diminish  rapidly  the  initial  unit  cost  and 
time  spent  in  selecting  it. 

A  manufacturer  of  food  products  plans  to  put  on 
the  market  a  package  of  macaroni  under  the  firm's 
collective  trade-mark.  The  usual  method  of  selection 
has  been  that  of  having  the  officers  of  the  company 
make  the  selection,  choosing  a  package  that  they 
thought  would  please  the  public. 

Questions 

1.  Can  you  suggest  any  method  whereby  a  more 
definite  idea  can  be  secured  as  to  the  most  attractive 
package  among  a  group  of  designs  submitted? 

2.  What  methods  may  be  adopted  by  the  manufac- 
turers for  keeping  containers  fresh  and  salable? 

3.  What  requirements  should  a  good  container  fulfil? 


Problem  78 
Market  Analysis 

The  first  step  in  analyzing  demand  is  to  determine 
the  classes  of  users  and  their  buying  habits  with  refer- 
ence to  a  specific  line.  The  demand  for  commodities 
varies  in  extent  from  purely  local  to  international. 
The  buyers  in  the  market  may  be  classified  upon  many 
different  bases  to  facilitate  determination  of  number  of 


SALES  PLANNING  AND  RESEARCH 


161 


prospective  buyers  for  a  given  product.  Age,  sex, 
marital  condition,  wealth  and  income,  occupation, 
nationality,  all  affect  nature  of  purchasers  and  buying 
habits.  For  many  articles,  purchasers  may  be  easily 
determined.  For  others,  extended  research  may  be 
necessary  to  determine  where  the  prospective  demand 
begins  or  what  the  limitations  of  demand  are. 

The  following  outline,  published  in  Printers'  Ink,  is 
suggestive  of  the  possible  field  of  demand: 

ANALYSIS  OF  POSSIBLE  FIELD  OF  DEMAND 


FIELD 


City 

Wealthy 

Town 

Well-to-do 

Country 

Poor 

Location 

Local 

Married 

Territorial 

Single 

National 

Young 
Middle-aged 

Male.  . 

Old 

CONSUMEE 

s 

I^^bo"-    {failed 

Farmers 

Doctors 

Mechanics 

Lawyers 

Clerks 

Ministers 

Professions  .  . 

Dentists 

Business  Men 

Mech.  Engr 

Elec.  Engr. 

Ciyil  Engr. 

Etc. 

I  Rich 

Medium 

Poor 

Married 

Single 

Young 

Old 

FeMALE' 

Middle-aged 

Servants 

Factory  Workers 

Office  Workers 

Trade  Workers 

Professional  Workers 

Mothers 

Society  or  Club  Women 

Frigid 

Temperate 

Tropic 

Climate  . 

Length  of  Seasons 

Temperature 

Rainfall 

[Veg 

etation 

162        PROBLEMS  IN  SALE8  MANAGEMENT 


Financial  Condi- 
tion Depknds 
ON 


Crops 
Mining 

Manufacturing 
Transportation  Lines 
Speculation 
[  Professional  Services  Rendered 

Railroads 
Water  Routes 
Trolley 
TUANSI'OUTATION.  J  Waf^ons 

Pack  Trains 
Length  of  Haul 
FIELD'  I  Rates 

I,  Method  of  Packing 

f  Officered  by  Old  Men 
I  Officered  bj-  Young  Men 

Aggressive 
'  Lax 

Long-estal)lishcd 

Xewlv  established 

^^'ealthy 
Competition  ....■(  Limited  Means 

I  Their  Sales  Plans 

\  Their  Advertising  Campaign 

Their  Policy  toward  Customers 
,  Their  Sales  Force 

'  Their  Credit  Department's  Attitude 
'       toward  Customers 
[  Their  Sales  Manager 

Questions 

What  additional  information,  if  any,  would  be 
required  to  analyze  the  potential  demand  for  one  of 
the  following  products:  high-grade  automobiles,  uni- 
versal joints  used  in  the  manufacture  of  automobiles, 
rubber  belting,  men's  work  shoes,  condensed  milk, 
canned  fruit,  structural  steel,  bindery  twine,  ginghams, 
high-grade  carpenters'  tools,  foundry  products,  drop- 
forgings,  men's  collars,  household  I'efrigerators,  wood- 
working machinery,  pianos,  varnishes,  fountain  pens, 
sewing-machines,  silver-plated  flat  ware,  artificial  limbs, 
surgical  appliances,  type-setting  machines,  confec- 
tionery, rubber  tires,  flour,  locomotives? 


SALES  PLANNING  AND  RESEARCH  163 

Problem  79 
Research  to  Determine  Stability  of  Demand 

The  president  of  the  Borden  Shoe  Company,  manu- 
facturers of  high-grade  shoes,  stated  in  1920  that  his 
best  market  was  in  the  South  and  that  the  negroes  were 
accustomed  to  spend  freel}^,  buying  the  best  grade  of 
shoes.  Although  the  sales  were  widely  scattered,  a 
large  percentage  was  concentrated  in  southern  districts. 
The  efforts  of  the  sales  department  were  directed 
mainly  toward  maintaining  business  in  that  section. 

One  of  the  junior  executives  claims  that  the  southern 
market  is  not  a  permanent  one  and  that  special  effort 
should  be  directed  toward  building  up  the  dealer  organi- 
zation and  the  sale  of  these  shoes  in  northern  territory. 

The  company  operates  three  retail  stores  in  New 
York,  and  their  success  demonstrates  to  the  firm  the 
style  and  quality  value  of  the  goods. 

Questions 

1.  Is  the  recommendation  to  concentrate  efforts  on 
northern  territory  sound? 

2.  What  facts  does  the  executive  need  to  prove  his 
case? 

3.  How  can  he  get  them? 


Problem  80 
Market  Analysis  for  Auto  Accessories 

A  company  manufactures  automotive  equipment 
and  specialties,  such  as  electrical  fittings,  switches,  and 
timers,  also  Ford  parts.  These  specialties  are  designed 
particularly  for  Fords,  but  may  be  used  on  other  cars 
in  the  Ford  class. 


164        PHUBLKiMS  IN  SALES  MANAGEMENT 

Questions 

1.  What  information  can  be  secured  as  to  the  market 
for  such  products? 

2.  How    may  the  expense  of  a  direct-to-consumer 
mail  campaign  be  estimated? 


I*ROBLEM   81 

Market  Analysis 

A  company  which  manufactures  fihng  equipment 
and  bookkeeping  machines  makes  the  following  state- 
ment: 

In  round  figures  there  are  1,240,000  coinmereial  houses, 
banks,  institutions  and  hotels  in  this  country  that  can  use 
our  products.  \Vc  have  boasted  of  56,000  customers  sold 
in  two  years.  Our  lists  have  an  average  of  10,000  possi- 
bilities per  territory,  but  we  average  only  about  200 
customers  per  territory  per  year.  The  highest  sales  volume 
last  j^ear  was  320  customers.  The  following  shows  our 
activities  in  a  fair  provincial  territory: 

Possibilities    We  Sell  Yearly  Sales 

General  Stores 1,138  12  $      900.00 

Retail  Groceries 1,113  10  450.00 

Wholesale  Groceries 271  28  3,200.00 

Retail  Dry-Goods 211  5  420.00 

Retail  Drugs 432  5  190.00 

Retail  Furniture 282  1  75.00 

Retail  Lumber 434  31  1,225.00 

Manufacturers 848  7  2,325.00 

Retail  Hardware 293  18  950.00 

Retail  Clothes 191  2  75.00 

Hotels 65  3  190.00 

Garages 248  4  425.00 

Banks 251  18  828.00 

5,777  144  $11,253.00 

Questions 

1.  What  conclusions,  if  any,  can  be  drawn  from 
these  facts? 

2.  Are  the  "possibilities"  of  equal  value? 


II 


SALES  PLANNING  AND  RESEARCH         165 

Problem  82 
Market  Analysis 

Questions 

1.  What  methods  should  be  adopted  for  securing 
maiUng  lists  of  prospective  users  and  lists  of  dealers  to 
be  used  in  planning  sales  campaigns  for  the  following 
concerns? 

(a)  Manufacturers  of  interior  telephone  and  sig- 
naling equipment. 

(6)  A  cigar  manufacturer  who  plans  campaign  in 
Illinois. 

(c)  A  manufacturer  of  automobile  trucks. 

(d)  A  manufacturer  selling  snap  fasteners. 

(e)  Manufacturer  of  non-glare  lenses  for  auto- 
mobile headlights. 

(/)  Manufacturer  of  farm  tractors. 

2.  How  can  mailing-lists  be  kept  up  to  date? 


Questions 
3.  To  what  extent  and  under  what  conditions  can 
a  mailing-list  be  used  in  the  following  cases? 
(a)  Planning  advertising  activities. 
(6)  Establishing  a  salesman's  quota. 

(c)  Locating  factory  branches. 

(d)  Appraising  the  possible  yield  of  territories. 

(e)  As  a  means  of  establishing  jobber  connections. 
(/)  As  a  means  of  control  of  salesmen. 


Kit;        PlioiU.EMS  IN  SALES  MANAGEMENT 

I'UOIU.KM    83 
MaUKKT    HkACIIKI)     HV    Al)VERTlSIN(i 

The  statciiuMit  has  been  jiuule  that  the  maximum 
market  wliicli  it  is  possible  to  cultivate  by  advertising 
for  most  medium  and  high-grade  goods  may  be  cal- 
culated as  follows: 

(1)  Take  the  number  of  urban  families  of  white 
blood  in  which  one  or  })<)th  parents  were  born  in  the 
United  States; 

(2)  Add  5%  of  resulting  figure  to  above  to  include 
suburban  residents  classed  as  rural; 

(3)  Add  30%  of  rural  white  famihes  in  which  one  or 
both  parents  were  born  in  the  United  States,  because 
these  are  susceptible  to  urban  trade  influences; 

(4)  DedjLict  50%  to  eliminate  those  with  insufficient 
incomes. 

Question 
Criticize  the  method  and  its  results  as  applied  to  the 
year  1920. 


Phohlk.m   84 
Market  Analysis  for  Staple  Product  and  Specialty 

Questions 
Select  one  sta])le  product  and  one  specialty.     For 
each,  prepare  a  market  analysis,  securing  information 
upon  the  following  points  among  others : 

(1)  The  exact  sources  of  population  statistics  appli- 
cable to  this  particular  analysis, 

(2)  The  exact  sources  of  information  as  to  retail 
dealers,  directories,  etc. 


SALES  PLANNING  AND  RESEARCH  167 

(3)  The  exact  sources  of  information  as  to  jobbers, 
wholesalers,  and  other  agencies. 

(4)  The  exact  sources  of  information  as  to  prospec- 
tive purchasers  where  possible. 

(5)  Sources  of  information  upon  buying  habits  of 
consumers. 

(6)  Sources  of  information  upon  competitive  prod- 
ucts and  competing  manufacturers. 


Pkobleim  85 
Analysis  or  Market  for  Turbines 

According  to  a  newspaper  report,  plans  are  being 
made  to  market  a  new  invention  in  the  way  of  a  revers- 
ible turbine,  for  which  is  claimed  the  possibility  of 
revolutionizing  present  methods  of  driving  big  ships. 
The  value  of  the  invention  is  said  to  be  in  the  fact  that 
the  blades  will  be  confined  to  one  section,  instead  of 
two,  as  now  prevalent,  wdth  power  to  reverse  the  move- 
ment of  ships  almost  immediately,  without  the  loss  of 
time,  pressure  and  velocity. 

The  invention  is  that  of  Fausto  Pedreira  Machado, 
a  Brazilian,  now  a  resident  of  this  city  (New  York),  who 
was  sent  to  this  country  by  the  President  of  Brazil  to 
find  a  market.  The  result  was  the  incorporation  in 
Delaware  of  the  American  Machado  Turbine  Corpora- 
tion, with  a  capital  of  $1,000,000  and  headquarters  at 
HI  Broadway.  The  invention  was  patented  in  this 
country  on  November  30,  1920,  and  it  is  stated  plans 
are  being  formulated  to  establish  a  manufacturing 
plant  in  the  vicinity  of  New  York. 

Question 
How  should  the  officers  of  the  company  go  about  get- 
ting information  relative  to  the  market  for  the  product? 


1()S        PRoni.llMS  IN  SALES  MANAGEMENT 

puoijlkm  86 
Maukkt  Analysis — Work  Gauments 

For  cip;ht  years  the  Higgins  Company  has  manufac- 
tured a  lino  of  work  garments,  specializing  in  one-piece 
work  suits,  or  jacket  with  pair  of  overalls  combined. 
Samples  of  this  garment  were  first  placed  in  the  hands 
of  salesmen  in  January,  1913.  During  the  year  there 
were  sold  only  1 1 S  dozen.  By  the  first  of  January,  1914, 
it  was  virtuall}'  decided  to  discontinue  the  garment. 
In  March,  1914,  calls  began  to  come  in  for  more  of  the 
combination  garments.  By  the  end  of  the  year  there 
were  sold  4,800  dozen.  The  sales  in  succeeding  years 
were  as  follows: 


1915. . 

.  .  10,500  dozen 

191G.. 

.  .  66,000  " 

1917. . 

.  .  154,214  " 

1918. . 

.  .  190,000  " 

1919.. 

..260,000  " 

1920. . 

.375,000  " 

(not  including  those 
purchased  by  Govt.) 

The  development  of  sales  in  this  garment  proved  of 
such  proportions  that  the  factories  specialized  in  this 
particular  line  and  new  plants  were  opened  in  Topeka, 
Kansas;  San  Francisco,  California;  Cleveland,  Ohio; 
Harrison,  New  Jersey;  and  Minneapolis,  Minnesota. 
The  largest  business,  considering  population,  in  the 
history  of  its  development  is  secured  from  the  state  of 
Illinois,  in  which  the  concern  was  first  located. 

The  regular  line  consists  of  eight  numbers  for  men, 
three  for  youths,  three  for  boj^s,  and  one  for  children, 
in  the  highest -grade,  trade-marked  line.  There  is  also 
another  line,  which  is  described  as  inferior  to  the  trade- 
marked  garments.  The  label  does  not  bear  the  name 
of  the  company ;  much  less  yardage  is  used ;  it  lacks  not 
only  the  wearing  cjuality,  but  the  comfortable  features 
of  the  trade-marked  garment.  It  is  made  and  sold  for 
the  purpose  of  meeting  price  competition  where  the 
better  garment  cannot  be  sold;  the  line  is  not  sold 
except  as  a  last  resource.  It  was  introduced  in  re- 
sponse to  the  insistent  demand  of  salesmen  for  a  line 
which  could  be  sold  in  competition  with  mail-order 
houses  in  certain  farming  communities. 


SALES  PLANNING  AND  RESEARCH  169 

Questions 

1.  Make  a  market  analysis  for  New  England  for 
this  company's  line,  with  a  view  to  determining 
whether  or  not  a  factory  should  be  located  there. 

2.  Should  the  company  continue  to  handle  the 
inferior  line  mentioned  above? 


Problem  87 
Research  as  Basis  for  Distribution  Policy 

The  Garvin  Company  manufactures  various  paper 
products,  among  which  are  featured  a  cup,  a  spoon,  and 
a  fork.  These  articles  are  made  of  fiber,  cost  little, 
and  are  to  be  thrown  away  after  having  been  used 
once.  The  spoons  and  forks  are  sold  exclusively  in 
bulk,  500  in  a  package;  the  cups  are  sold  in  packages 
of  100.  The  product  is  distributed  through  manufac- 
turers' agents  and  wholesalers.  There  are  three  prin- 
cipal points  from  which  the  product  is  sold.  A  New 
York  manufacturers'  agent  covers  the  entire  eastern 
territory,  with  the  exception  of  a  few  small  New 
England  cities  in  which  the  company  sells  direct  to 
wholesalers.  The  Chicago  representati\'e  is  a  whole- 
sale paper  concern  with  a  territory  comprising  12 
middle  western  states.  The  third  is  a  wholesaler 
located  in  Kansas  City,  who  has  been  given  the  remain- 
ing states  west  of  the  Mississippi.  In  addition  to  the 
above,  a  few  wholesalers  represent  the  company  in 
10  of  the  smaller  cities  of  the  South. 

The  results  have  not  been  satisfactory.  The  goods 
were  first  placed  upon  the  market  in  1917,  when  the 
sales  amounted  to  about  $20,000.  In  the  following 
year,  sales  were  trebled;  in  1919,  sales  were  double 
those  of  1918.     The  volume  manufactured  and  sold 


170        PHORLKM8  IN  SALES  MANAGEMENT 

is  insufficient  to  keep  the  selling  price  low  and  yet 
leave  a  fair  nmigiii  of  profit.  The  company  feels  that 
the  system  of  (list rihut  ion  re(iuires  revision  and  that  a 
national  sales  organization  and  policies  must  be  devel- 
oped which  will  ([uickly  absorb  daily  maxinuim  pro- 
duction of  the  factory  and  divert  as  little  as  possible  of 
the  working  capital  from  production  to  sales  expense. 

Questions 

1.  Wliat  information  does  the  sales  manager  need 
in  order  to  formulate  new  plans? 

2.  Where  is  this  information  to  be  secured? 


PiiOBLp:M  88 

Research  to  Determine  Type  of  Dealer  to 

Sell  Product 

The  Cutler  Company  manufactures  a  patented  tem- 
perature-retaining container,  first  introduced  during 
the  war  when  the  Government  bought  the  output  for 
the  purpose  of  packing  and  preserving  food.  The 
container  is  shaped  like  a  long  pail  or  bucket,  Ught  in 
weight,  and  made  of  paper  and  metal.  It  gains  its 
power  of  preservation  from  a  system  of  air  cells  on  the 
top  and  bottom,  so  that  outside  temperature  reaches 
the  interior  very  slowly.  It  is  made  in  one-quart  and 
two-quart  sizes,  selfing  for  SI. 50  and  S3. 50  respectively. 
It  is  a  development  following  the  introduction  of  a 
vacuum  model.  It  has  a  number  of  uses  and  will  keep 
several  kinds  of  liquids  and  foods  in  their  original  condi- 
tion for  several  hours. 

The  officers  of  the  company  are  confronted  with  the 
problem  of  marketing  the  product.  While  they  realize 
that  it  may  be  sold  by  hardware  dealers,  druggists,  and 


I 


SALES  PLANNING  AND  RESEARCH  171 

others  selling  vacuum  containers,  they  feel  that  this  is 
not  so  large  a  market,  particularly  for  their  product, 
as  they  desire.  The  suggestion  is  made  that  it  be 
marketed  not  only  through  the  ordinary  type  of  dealer, 
but  also  through  ice-cream  parlors  and  ice-cream  manu- 
facturers, who  would  sell  the  product  together  with 
the  ice-cream. 

Question 
What  information  is  necessary  to  determine  the  best 
policy  for  distributing  this  product? 


Problem  89 
Research   to  Determine  Distribution  of  a  Product 

The  Norton  Clock  Company  manufactures  clocks  and 
sells  them  entirely  through  jobbers.  Since  clocks  form 
only  a  portion  of  the  line  of  the  various  jobbers  and 
only  a  small  part  of  the  stock  of  any  retailer,  traveling 
salesmen  direct  to  the  retail  trade  to  create  a  demand 
seem  to  be  expensive  and  uneconomical.  Nevertheless, 
since  the  clock  manufacturer  has  been  a  consistent 
advertiser,  he  desires  to  know  more  about  the  distribu- 
tion of  his  product  than  he  does  at  present.  While  the 
volume  of  sales  has  grown  from  year  to  j^ear,  the  sales 
manager  feels  that  he  is  in  the  dark  as  to  the  possibil- 
ities of  further  increase  and  that  knowledge  as  to 
distribution  among  retailers  would  assist  him  materially 
in  planning  for  the  future.  Such  information  is  neces- 
sary also  for  the  proper  direction  of  advertising. 

Question 
What  is  the  easiest  method  to  determine  the  distri- 
bution of  a  nationally  advertised,  trade-marked  article 
sold  through  jobbers  where  the  salesman  does  not  call 
on  the  retail  trade? 


172        PHOHLKMS  IN  SALES  MANAGEMENT 

Puom.K.M  1)0 
Analysis  of  Distuibution 

Representatives  of  the  Merchandising  Bureau  of  the 
Baltimore  News  recently  made  a  survey  of  the  city  to 
ascertain  the  market  condition  of  cane,  corn,  compound 
and  maple  syrups  and  molasses  in  the  stocks  of  various 
wholesale  firms  and  retail  grocery  stores.  Compilations 
of  the  reports  show  that  there  were  about  20 
brands  in  the  stocks  of  retailers.  The  facts  were  pre- 
sented as  follows: 

Number  of  stores  Approximate 
out  of  100        percentage  of 
Brand  where  sold         distribution 

Golden  (^rown 97  97% 

Karo 88  88 

Br'er  Rabbit 75  75 

Star  Brand 19  19 

Log  Cabin 12  12 

Turkey  Brand 7  7 

King 5  5 

My  Wife's 4  4 

Penn  Mar 4  4 

Domino 3  3 

Mayflower 1  1 

Mountain  Bo}^ 1  1 

Palmetto 1  1 

Dew  Drop 1  1 

Falcon 1  1 

Golden  Gem 1  1 

First  Prize 1  1 

Orla  Molasses,  Old  Time  Molasses  and  Aunt  Dinah 
Molasses  are  also  sold  in  Baltimore,  but  seldom  in  warm 
weather.  At  the  time  of  the  survey,  none  of  these  was 
carried  by  any  of  the  stores  visited. 

A  second  table  was  included,  giving  the  activity  rat- 
ing, which  it  explained  as  follows:  "Believing  that  the 
process  of  securing  distribution  represents  about  60% 
of  market  cultivation,  that  the  influences  which  estab- 
lish a  product  as  a  leader  in  its  line,  though  not  less 
important,  represent  about  30%,  and  that  the  class  of 
retail  outlets,  their  location,  their  relative  value  as 
outlets  for  the  particular  product  under  consideration, 


SALES  PLANNING  AND  RESEARCH 


173 


represents  about  10%,  these  products  have  been  com- 
puted on  that  basis.  By  way  of  illustration,  let  us 
suppose  that  Brown  &  White  have  succeeded  in  getting 
an  indicated  distribution  of  98%,  that  their  product  is 
sufficiently  well  known  and  liked  as  to  make  it  the  best 
seller  in  23  stores  out  of  the  100  interviewed  during  an 
investigation,  and  that  every  high-class  store  in  the 
city,  including  all  of  the  downtown  stores,  carries  it  in 
their  stock. 

"The  rating  would  be  worked  out  as  follows: 

Distribution 98%=  60%  of  total  =58.8 

Sales  leadership 23     =  30%  of  total  =  6.9 

Class  of  outlets 99     =  10%  of  total  =  9.9 

Sales  activity  rating 75.6 

According  to  this  plan,  the  table  showing  the  sales 

activities  of  table  syrups  in  Baltimore  appeared  as 
follows : 

Number  of 
times  reported 

leader  in  Activity 

Brand                         100  stores  rating 

Golden  Crown 74  90.4 

Karo 17  65.9 

Br'er  Rabbit 0  51.1 

Star  Brand 0  13.1 

Log  Cabin 0  9.2 

Turkey  Brand 1  x 

King 2  X 

My  Wife's 0  x 

Penn  Mar 0  x 

Domino 0  x 

Mayflower 1  x 

Mountain  Boy 0  x 

Palmetto 0  x 

Dew  Drop 0  x 

Falcon 0  x 

Golden  Gem 0  x 

First  Prize 0  x 

(The  sign  x  indicates  a  rating  of  less  than  five.) 


174        PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  What  conclusions  are  to  be  drawn  from  the  view- 
point of  the  American  Sugar  Refining  Company,  manu- 
facturing Domino  Tabic  Syrup? 

2.  What  further  information  would  be  desirable  for 
the  Corn  Products  Company,  manufacturers  of  Karo 
Syrup,  in  order  to  determine  whether  the  situation  in 
Baltimore  is  satisfactory? 

3.  Would  it  be  profitable  for  the  Corn  Products 
Company  to  undertake  a  similar  survey  through  special 
agents  for  the  larger  cities  of  the  country? 

4.  Criticize  the  activity  rating  as  an  index  of  dis- 
tribution. 

5.  What  measures  must  be  taken  in  order  to  secure 
results  that  may  be  regarded  as  significant? 

6.  Assuming  that  the  100  stores  chosen  for  investi- 
gation contributed  a  fair  sample  from  a  statistical 
standpoint,  what  is  the  significance  of  88%  distribution 
for  Karo  syrup? 


Problem  91 
Research  to  Determine  Status  of  Distribution 

A  cooperative  fruit  growers'  association,  located  in 
the  state  of  Washington,  sells  most  of  its  crop  in  the 
big  consuming  centers  of  the  East.  In  discussing  the 
new  advertising  campaign,  the  sales  manager  said: 

We  have  often  wondered  if  the  retail  merchants  were 
really  pushing  the  sale  of  boxed  apples  as  much  as  they 
might.  You  no  doubt  have  heard  western  apples  criticized, 
because  some  particular  eastern  friends  have  made  state- 
ments somewhat  as  follows:  "Althoup;h  they  look  nice,  they 
don't  taste  like  New  York  state  apples,"  etc.  We  have  no 
figures  on  the  margin  at  which  our  apples  move,  either 


SALES  PLANNING  AND  RESEARCH  175 

jobbers'  or  retailers',  and  this  information  would  be  very 
useful  to  us,  especially  since  we  contemplate  in  years  to 
come  doing  considerably  more  advertising  in  the  retail  and 
jobbing  field. 

Question 
How  could  he  get  the  information  he  desires? 


Problem  92 
Market  Research 

The  Sanders  Company,  of  Boston,  was  organized  in 
1920  to  undertake  the  manufacture  and  distribution  of 
a  new  photographic  product.  The  company  was  in  the 
hands  of  competent  executives  and  had  sufficient  finan- 
cial backing  to  adopt  such  methods  as  seemed  best  in 
order  to  develop  the  market.  The  management  de- 
sired to  make  a  careful  analysis  before  launching  the 
product  which  was  planned  for  the  latter  part  of  1921. 

Briefly,  the  chief  product  of  the  company  was  to  be 
a  highly  sensitized  photographic  paper  on  which  pic- 
tures could  be  taken  directly,  thus  eliminating  the  use 
of  the  film  or  negative.  This  paper  w  as  to  be  marketed 
in  rolls  suited  for  the  various  types  of  cameras  upon  the 
market.  The  promoters  of  the  company  laid  emphasis 
upon  the  following  selling  points  of  the  paper : 

1.  Speed  in  Getting  Pictures 
The  development  of  the  pictures  was  claimed  to  be  both 
simple  and  rapid.  Inasmuch  as  the  necessity  of  printing 
from  a  film  was  eliminated,  greater  speed  in  obtaining 
finished  pictures  was  possible.  A  roll  of  pictures  could  be 
developed  in  five  or  ten  minutes.  This  made  possible  much 
quicker  results  with  amateur  developers,  and  promised 
greater  speed  from  trade  finishers. 


170        PROBLEMS  IN  SALES  MANAGEMENT 

2.  llioDucTioN  OF  Cost 
It  was  ostiniated  that  tlie  cost  of  finished  pictures  would 
be    i'c(hi('('d    My/o    since    tlie    lihn    and    its    finishing;    were 
eliminated. 

3.  Quality  Results  in  Picture  Taking 

Besides  the  paper  tiie  management  also  expected  to 
sell  the  chemicals  and  aj)j)aratus  necessary  for  develop- 
ing pictures  and  a  reproduction  device  whereby  copies 
and  enlargements  of  the  original  could  be  obtained. 

Question 
What   should   have   been   included   in   the   market 
analysis? 


Problem  93 
Research  to  Determine  Method  of  Reaching  Market 

The  Marshall  Company  has  for  a  number  of  years 
manufactured  steel  office  furniture  and  filing  equip- 
ment. In  order  to  increase  its  sales,  it  investigated  the 
safe  deposit  box  market,  and  conceived  the  idea  of 
manufacturing  them  in  units  of  standard  sizes;  in  this 
particular,  following  the  same  idea  that  was  used  in 
their  other  metal  office  equipment.  Their  standard 
units  consisted  of  boxes  of  different  sizes  which  were 
perfectly  aligned,  were  capable  "of  performing  the  same 
task  as  built-in  boxes,  and  cost  from  ?>2>]/^%  to  40%  less. 
They  were  as  safe  and  secure  as  the  old-style  boxes  and 
could  be  delivered  in  30  days.  The  company  is  unde- 
cided as  to  whether  it  should  attempt  to  reach  users 
directly  through  the  regular  channels  for  office  furni- 
ture. 

Question 

What  information  can  be  secured  to  aid  in  deciding? 


SALES  PLANNING  AND  RESEARCH  177 

Problem  94 
Sales  Districts 

The  Northfield  Manufacturing  Company  manufac- 
tures ventilating  equipment  for  creameries,  barns,  and 
hog-houses.  It  is  located  in  a  small  Wisconsin  city. 
There  are  no  branch  offices.  There  is,  however,  an 
eastern  representative  located  in  New  York  City,  who 
has  a  display  room  in  the  Grand  Central  Palace. 
Through  the  central  and  northwestern  states,  such  as 
Michigan,  Ohio,  Indiana,  Illinois,  Minnesota,  Wiscon- 
sin, the  Dakotas,  and  Montana,  the  company  sells 
mostly  direct  to  the  dealer,  though  where  no  dealer  is 
established  sales  are  made  direct  to  the  consumer. 
Lumber  dealers  constitute  the  main  distributors  in  the 
Middle  West;  while  in  the  East,  dealers  who  handle 
dairy  supplies,  barn  equipment,  and  farm  machinery 
seem  to  be  better  agents.  Salesmen  work  out  of  the 
home  office,  covering  both  northwestern  and  eastern 
states.  Mail  orders  are  filled  and  solicited,  particularly 
in  the  territories  not  covered  by  salesmen. 

Question 
How  should  the  company  determine  number  and 
boundaries  of  sales  districts  to  be  established? 


Problem  95 
Sales  Districts 

No  uniformity  is  followed  by  large  enterprises  in 
choosing  sales  districts,  as  is  shown  by  the  selection  of 
four  divisions  for  a  company  manufacturing  an  office 
appliance,  sales  headquarters  at  New  York;  five 
divisions  by  a  manufacturing  druggist,  headquarters  in 
the  same  city ;  six  divisions  by  an  office  appliance  man- 
ufacturer using  Cleveland  as  a  center;  seven  divisions 


178      i'iu)bi.I':ms  in  sales  management 

in  the  case  of  an  office  appliance  company,  with  head- 
quarters at  Detroit;  nine  divisions  1)}'  a  paint  manufac- 
turer, whose  main  sales  office  is  located  at  Chicago; 
twenty-four  divisions  by  a  Milwaukee  company  han- 
dling gasoline  engines,  factory  and  mill  sui)))lies;  forty- 
five  divisions  office  api)liance,  headciuarters  Chicago. 
At  least  four  of  the  firms  mentioned  direct  their 
selling  efforts  toward  the  same  classes  of  prospects. 

Questions 

1 .  What  reasons  may  be  assigned  for  the  difiference 
in  number  of  districts  chosen? 

2.  To  what  extent  does  the  number  of  districts 
chosen  depend  upon  company  policy  with  regard  to 
control  of  branches  and  salesmen? 

3.  Is  it  advisable  to  depart  from  using  state  lines 
for  delimitation  of  territories  if  number  of  districts  is 
less  than  the  number  of  states? 

4.  Why  or  why  not? 


Problem  96 
Redistricting  Sales  Territories 

The  Beaver  Board  Company  manufactures  and 
distributes  paints  and  varnishes,  blackboards,  "Vul- 
canite" roofing  and  a  wall  board  extensively  advertised 
under  the  name  ''Beaver  Board"  which  takes  the 
place  of  lath  and  plaster  and  makes  the  use  of  plaster 
unnecessary.  According  to  1920  statements,  Beaver 
Board  is  distributed  through  9,000  dealers  in  the 
United  States  and  foreign  countries.  Sales  offices  in 
the  United  States  are  located  in  Albany,  Buffalo,  Balti- 
more, Birmingham,  Boston,  Cleveland,  Chicago,  Cin- 
cinnati,   Detroit,    Kansas   City,    Milwaukee,    Minne- 


SALES  PLANNING  AND  RESEARCH         179 

apolis,  New  York,  St.  Paul,  and  San  Francisco.  The 
company  has  considered  redistricting  its  sales  terri- 
tories on  the  basis  of  population,  so  that  each  district 
would  comprise  about  1,000,000  inhabitants. 

Question 
Take  an  outline  map  of  the  United  States  and  divide 
into  territories  on  this  basis,  indicating  district  head- 
quarters. 


Problem  97 
Districting  and  Routing  of  Salesmen 

The  R,  B.  Randolf  Company  of  Boston  manufactures 
men's  shirts  and  pajamas.  It  distributes  its  product 
directly  to  retailers,  and  in  connection  with  this  distri- 
bution the  company  carries  on  a  wholesale  business  in 
men's  furnishings.  Goods  of  its  own  manufacture  are 
sold  chieflj'  under  its  own  brand,  though  a  dealer's 
mark  is  substituted  if  desired.  The  company's  label  is 
likewise  placed  on  all  articles  in  the  wholesale  line 
except  those  advertised  by  the  manufacturers.  The 
market  of  the  company  is  the  territory  east  of  the 
Mississippi  and  north  of  a  line  running  approximately 
from  St.  Louis  to  Washington,  D.  C;  75%  of  the  total 
sales,  however,  are  made  in  New  England. 

The  company  is  an  old,  established  concern  that  up 
to  1921  had  seen  fit  to  make  but  few  changes  in  man- 
agement or  in  its  method  of  conducting  business. 
Growth  had  been  slow  and  steady,  and  the  organization 
had  remained  almost  intact;  the  turnover  of  the  sales 
force  had  been  small.  In  1921,  through  the  retirement 
of  older  members  of  the  firm,  a  new  management  took 
charge.  In  the  reorganization  that  took  place  at  that 
time  among  other  changes  the  new  management  desired 
to  alter  the  system  of  districting  and  method  of  control- 


180        PROBLEMS  IN  SALES  MANAGEMENT 

ing  the  sales  force  in  an  attempt  to  secure  a  wider 
distribution. 

When  the  new  inanafj;enient  took  charge,  the  sales 
force  consisted  of  20  men,  most  of  whom  had  long 
been  in  the  employ  of  the  company.  They  were  paid 
on  a  flat  commission  basis,  and  each  had  his  own  set  of 
customers.  Each  salesman  was  zealous  in  his  efforts 
to  keep  for  himself  these  customers,  because  the  com- 
mission from  each  account  heljjed  to  swell  his  income. 
In  the  course  of  time  the  districting  of  salesmen  in  some 
places  had  become  confused,  so  that  crisscrossing  of 
routes  was  not  infrequent.  In  some  instances  three 
salesmen  visited  the  same  city.  As  an  example  of  the 
manner  in  which  such  a  condition  arose  may  be  cited 
the  case  of  one  of  the  older  salesmen  who  had  worked 
up  a  list  of  customers  in  the  larger  cities  of  Massa- 
chusetts and  Connecticut.  He  had  neither  the  time 
nor  the  patience  to  take  care  of  the  small  stores  in 
these  cities,  so  younger  salesmen  were  permitted  to  en- 
ter there  to  care  for  the  small  accounts. 

In  June,  1921,  the  districting  and  routing  was  some- 
w^hat  as  follows: 

Maine:    2  salesmen. 

New  Hampshire:  1  salesman.  This  man,  however, 
visited  several  towns  in  Maine. 

Vermont  and  Northern  New  York  (Lake  Champlain 
District) :    1  salesman. 

Boston  and  environs:  4  salesmen. 

Massachusetts  (outside  of  Boston  District),  Rhode 
Island,  Connecticut:  One  salesman  visited  selected 
accounts  in  the  larger  cities.  Four  other  salesmen  had 
the  three  states  roughly  divided  between  them,  but  the 
lines  of  demarcation  of  territory  were  not  at  all  clear 
and  the  routes  crossed  many  times. 

New  York :  New  York  Citj"  had  a  branch  salesroom 
and  2  outside  salesmen.  One  salesman  covered  the  rest 
of  the  state  with  the  exception  of  the  northern  portion 
and  the  larger  cities.  A  member  of  the  firm  covered 
the  larger  New  York  cities  such  as  Rochester,  Syr- 
acuse, and  Buffalo. 


SALES  PLANNING  AND  RESEARCH 


181 


•    Local  Offices    . 
Ht*-  District  Boundanes 
©  Offices  Reporting  toNew  Hav 


Maryland,    Delaware,    and   Southern   New   Jersey: 
1  salesman. 
Pennsylvania  and  Northern  New  Jersey:  1  salesman. 
Illinois,  Wisconsin,  and  Michigan:    1  salesman. 
Ohio  and  Indiana:   1  salesman. 

The  salesmen  routed  themselves  and  made  no  regular 
report  to  the  management  except  for  such  notations  as 
occurred  on  the  order  slips. 

The  new  manager  of  the  company  desired  to  retain 
the  same  sales  force  but  wished  to  install  a  more  sys- 
tematic method  of  districting  and  routing. 

Questions 

1.  Toward  what  plan  of  districting  should  the  com- 
pany work? 

2.  What  measures  should  be  taken  to  retain  the 
good  will  of  the  sales  force  when  a  change  is  made? 


1S2        PHOBLKMS  IX  SALES  MANAGEMENT 

Sales  Districtin*; 

The  I'oiid  Hilling  Machine  Company  has  its  main 
sales  office  in  New  Haven,  Connecticut,  with  branch 
offices  in  96  cities  throughout  the  United  States,  as  well 
as  in  numerous  cities  in  foreign  countries.  Domestic 
sales  are  in  charge  of  an  assistant  sales  manager  under 
the  general  sales  manager. 

Previous  to  Julj%  1921,  there  were  19  sales  districts 
in  the  United  States,  each  in  charge  of  a  district  man- 
ager. Under  each  district  manager  were  local  man- 
agers in  charge  of  sales  and  service  stations  in  the  cities 
of  his  district.  The  district  manager  was  responsible 
for  the  hiring  and  control  of  the  sales  force  in  his  terri- 
tory and  for  the  supervision  of  local  branches. 

At  the  time  stated,  the  district  manager  received  his 
compensation  through  a  commission  on  the  sales  in  his 
district.  After  paying  those  subordinate  to  him  he  w^as 
left  with  about  5%  commission  on  sales  for  his  super- 
visory work.  Out  of  this  he  had  to  pay  the  expenses  of 
the  district  office,  as  well  as  his  traveling  expenses. 
During  the  war  period  and  until  the  fall  of  1920  this 
method  of  compensation  proved  satisfactory,  since  sales 
were  large.  When  the  depression  came,  however,  the 
commissions  were  not  sufficient  to  hold  the  services  of  a 
desirable  type  of  manager.  Moreover,  it  was  found 
that  the  work  in  the  districts  was  not  sufficient  to  fully 
occupy  the  time  of  a  district  manager  in  supervisory 
work.  Further,  the  districts  were  not  large  enough  to 
justify  maintenance  of  a  training  class  of  salesmen  by 
each  district  manager  to  be  in  readiness  for  such 
vacancies  as  occurred  in  the  sales  force.  In  addition, 
the  number  of  salesmen  under  each  district  manager 
was  so  small  that  if  any  one  of  them  slumped  in  sales  it 
materially  affected  the  record  of  the  whole  district  and 
correspondingly  reduced  the  salary  of  the  district 
manager. 

In  the  light  of  these  facts  the  domestic  sales  manager 
decided  to  redistrict  the  country,  reducing  the  number 
of  districts  from  nineteen  to  five.    Such  a  reduction  was 


SALES  PLANNING  AND  RESEARCH  183 

thought  advisable  inasmuch  as  it  would  enable  the 
manager  of  the  new  districts,  which  were  to  be  called 
divisions,  to  maintahi  a  school  for  salesmen,  while  the 
duties  would  be  sufficient  and  the  compensation  enough 
to  attract  men  of  high  caliber.  Moreover,  such  a 
scheme  would  make  fewer  reporting  heads  to  the  main 
oflfice  and  would  thus  simplify  control. 

The  map  on  page  181  shows  the  districts  as  they 
existed  at  the  time  reorganization  was  undertaken. 

The  list,  beginning  on  this  page,  of  the  counties  and 
states  included  in  each  district  gives  more  in  detail  the 
actual  territory  included  in  each  district,  as  well  as  the 
number  of  local  offices.  It  will  be  noted  that  a  number 
of  states  in  the  Middle  West  were  controlled  from  the 
home  office. 

District  No.  1  (New  England  District) 
Boston — District  Office 

Territory:  States  of  Maine,  New  Hampshire,  Vermont, 
Massachusetts,  Rhode  Island. 

Local  Offices:  Portland,  Me.;  Lebanon,  N.  H.;  Springfield, 
Mass.;  Worcester,  Mass.;  New  Bedford,  Mass.;  Providence, 
R.  I. 

District  No.  2  (Connecticut  District) 

New  Haven — District  Office 

Territory:     State  of  Connecticut 

Local  Offices:     Hartford,  Conn.;  Bridgeport,  Conn. 

District  No.  3  (New  York  District) 
New  York  City — District  Office 

Territory:  Southern  New  York  State — bounded  by  and 
including  Counties  Sullivan,  Ulster,  and  Dutchess;  Staten 
Island  and  Long  Island;  Northern  New  Jersey — bounded  by 
and  including  Counties  Ocean,  Monmouth,  Middlesex, 
Somerset,  Hunterdon,  Morris,  Sussex;  Pennsylvania — 
Counties  Wayne,  Pike,  Monroe,  Lackawanna,  Luzerne, 
Wyoming,  Sullivan,  Columbiana,  Montour,  Northumber- 
land, Lycoming,  Clinton. 

Local  Offices:  Newark,  N.  J.;  Paterson,  N.  J.;  Wilkes- 
Barre,  Pa. 


184        PROBLEMS  IN  SALES  MANAGEMENT 

District  No.  4  (Northwestern  District) 
Rochester — District  Oflice 

Territory:  All  of  New  York  State  except  southeastern 
corner  south  of  Counties  Delaware,  Greene  and  Columbia; 
Pennsylvania — Counties  Erie,  Crawford,  Warren,  McKean, 
Potter,  Tioga,  Bradford,  Sus(juehanna;  Ohio — Counties 
Lorain,  Medina,  Wayne,  Suniniit,  Stark,  Cuyahoga,  Lake, 
Geauga,  Portage,  Trumbull,  Ashtabula. 

Local  Offices:  Albany,  N.  Y.;  Syracuse,  N.  Y.;  Bingham- 
ton,  N.  Y.;  Utica,  N.  Y.;  Buffalo,  N.  Y.;  Erie,  Pa.;  Cleve- 
land, Ohio;  Akron,  Ohio. 

District  No.  5  (Philadelphia  District) 
Philadelphia — District  Office 

Territory:  Southeastern  Pennsylvania — bounded  by  and 
including  Counties  Fulton,  Huntingdon,  Center,  Union, 
Snyder,  Juniata,  Perry,  Dauphin,  Schuylkill,  Carbon, 
Northampton;  New  Jersey — Southern  N.  J.,  bounded  by 
and  including  Counties  Mercer  and  Burlington;  also 
County  Warren  in  Northern  N.  J. ;  Delaware — whole  state. 

Local  Offices:  Trenton,  N.  J.;  Camden,  N.  J.;  Wilmington, 
Del.;  Allentown,  Pa.;  Reading,  Pa.;  Harrisburg,  Pa. 

District  No.  6  (Pittsburgh  District) 
Pittsburgh — District  Office 

Territory:  Western  Pennsylvania — bounded  by  and  in- 
cluding Counties  Mercer,  Venango,  Forest,  Elk,  Cameron, 
Clearfield,  Blair,  Bedford;  Maryland — Counties  Garrett, 
Allegany;  West  Virginia  —  whole  state  except  Counties 
Morgan,  Berkeley,  Jefferson;  Ohio — Southeastern  Ohio, 
bounded  by  and  including  Counties  Mahoning,  Colum- 
biana, Carroll,  Tuscarawas,  Guernsey,  Noble,  Morgan, 
Washington;  Kentucky — Counties  Greenup,  Carter,  Boyd, 
Lawrence,  Johnson,  Martin,  Floyd,  Pike. 

Local  Offices:  Wheeling,  W.  Va. ;  Huntington,  W.  Va. ; 
Youngstown,  Ohio 

Proposed  Office:     Johnston,  Pa. 

District  No.  7  (Washington  District) 
Washington,  D.  C. — District  Office 

Territory:  State  of  Maryland — except  Counties  Garrett 
and  Allegany;  Virginia — whole  state  except  following 
counties:   Buchanan,    Russell,    Washington,    Scott,    Lee, 


SALES  PLANNING  AND  RESEARCH  185 

Wise,  Dickinson;  North  Carolina — Northeastern  corner, 
bounded  by  and  including  Counties  Northampton,  Bertie, 
Martin,  Washington,  Tyrell,  Dare. 

Local  Offices :  Baltimore,  Md. ;  Norfolk,  Va. ;  Richmond,  Va. 

District  No.  8  (Carolina  District) 
Charlotte,  N.  C— District  Office 

Territory:  North  Carolina — whole  state  except  north- 
eastern corner  bounded  by  and  including  Counties  North- 
ampton, Bertie,  Martin,  Washington,  Tyrell,  Dare;  South 
Carolina — whole  state. 

Local  Office:     Greenville,  S.  C. 

Proposed  Office — Wilmington,  N.  C. 

District  No.  9  (Southeastern  District) 
Atlanta,  Georgia — District  Office 

Territory:  Georgia — whole  state;  Florida — whole  state; 
Alabama — whole  state;  Tennessee — east  of  Tennessee 
River;  Kentucky — Counties  McCreary,  Whitley,  Knox, 
Bell,  Harlan;  Virginia — Counties  Buchanan,  Russell,  Wash- 
ington, Scott,  Lee,  Wise,  Dickinson. 

Local  Offices:  Savannah,  Ga.;  Jacksonville,  Fla.;  Birming- 
ham, Ala.;  Knoxville,  Tenn.;  Nashville,  Tenn. 

Proposed  Office:     Montgoriiery,  Ala. 

District  No.  10  (Cincinnati  District) 
Cincinnati,  Ohio — District  Office 

Territory:  Ohio — bounded  by  and  including  Counties 
Van  Wert,  Allen,  Hardin,  Marion,  Morrow,  Richland, 
Ashland,  Holmes,  Coshocton,  Muskingum,  Perry,  Athens, 
Vinton,  Jackson,  Pike,  Adams;  Kentucky — whole  state 
except  Counties  Greenup,  Carter,  Boyd,  Lawrence,  John- 
son, Martin,  Floyd,  Pike,  Harlan,  Bell,  Knox,  Whitley, 
McCreary;  Indiana — bounded  by  and  including  Counties 
Benton,  Tippecanoe,  Clinton,  Tipton,  Madison,  Delaware, 
Randolph;  Illinois — Counties  Clark,  Crawford,  Lawrence, 
Wabash,  White,  Hamilton,  Gallatin,  Hardin,  Saline,  Pope, 
Massac,  Johnson. 

Local  Offices:  Columbus,  Ohio;  Indianapolis,  Ind.;  Evans- 
ville,  Ind.;  Louisville,  Ky. 

Proposed  Offices:     Dayton,  Ohio;  Lexington,  Ky. 


ISO        PROBLEMS  IN  SALES  MANAGEMENT 

DisTUKT  No.   11   (Chicago  District) 
Chicago,  Illinois — District  Office 

Territory:  Illinois — hounded  by  and  including  Counties 
Stephenson,  Ogle,  Lee,  Bureau,  Henry,  Knox,  Warren, 
McDonougli,  Fulton,  Mason,  Logan,  Dewitt,  McLean, 
Ford,  Iro(}Uois;  Indiana  north  of  and  including  Counties 
Newton,  Jasper,  White,  Carroll,  Howard,  Brant,  Black- 
ford, Jay;  Alichigan — west  of  and  including  Counties 
Cheboygan,  Otsego,  Crawford,  Rosconinion,  Clare,  Isabella, 
Gratiot,  Clinton,  Ingliani,  Jackson,  Hillsdale. 

Local  Offices:  La  Porte,  Indiana;  Kalamazoo,  Mich.; 
Rockford,  111. 

Proposed  Offices:  Grand  Rapids,  Michigan;  Fort  Wayne, 
Indiana;  Peoria,  Illinois. 

District  No.  12  (Detroit  District) 
Detroit,  Michigan — District  Office 

Territory:  Michigan — east  of  and  including  Counties 
Presque  Isle,  Montmorency,  Oscoda,  Ogemaw,  Gladwin, 
Midland,  Saginaw^,  Shiawassee,  Livingston,  Washtenaw, 
Lcnaw^ee. 

Local  Office:     Bay  City,  Mich. 

District  No.  13  (Milwaukee  District) 
Milwaukee,  Wis. — District  Office 

Territory:  Michigan — northwestern  part  known  as  the 
Horn;  Wisconsin — bounded  by  and  including  Counties 
Villas,  Oneida,  Lincoln,  Marathon,  Wood,  Juneau,  Vernon. 

Local  Offices:     Green  Bay,  Wis.;  Madison,  Wis. 

District  No.  14  (St.  Louis  District) 
St.  Louis,  Mo.— District  Office 

Territory:  Missouri — east  of  and  including  Counties 
Putnam,  Sullivan,  Linn,  Chariton,  Howard,  Cooper, 
Morgan,  Camden,  Dallas,  Webster,  Douglas  and  Ozark; 
Illinois — bounded  by  and  including  Counties  Adams, 
Schuyler,  Cass,  INIenard,  Sangamon,  Alacon,  Piatt,  Cham- 
paign, Vermilion,  Edgar,  Coles,  Cumberland,  Jasper, 
Richland,  Edwards,  Wayne,  Jefferson,  Franklin,  William- 
son, Union,  Pulaski,  Alexander. 

Proposed  Office:     Springfield,  111. 


SALES  PLANNING  AND  RESEARCH         187 

District  No.  15  (Minneapolis  District) 
Minneapolis,  Minn. — District  Office 

Territory :  Wisconsin — bounded  by  and  including  Counties 
Iron,  Price,  Taylor,  Clark,  Jackson,  Monroe,  LaCrosse; 
Minnesota — whole  state;  North  Dakota — whole  state; 
South  Dakota — whole  state  except  Counties  Butte,  Meade, 
Lawrence,  Custer,  Fall  River  and  that  part  of  Pennington 
County  west  of  South  Fork  Cheyenne  River;  Canada — 
provinces  Saskatchewan,  Manitoba,  Ontario  west  of  a  line 
drawn  from  Melgund  on  the  C.  P.  R.  at  extreme  north  end 
of  Lake  Superior  to  the  point  where  Missinabi  River  enters 
James  Bay. 

Local  Offices:     St.  Paul,  Minn.;  Winnipeg,  Canada. 

Proposed  Office:     Duluth,  Minn. 


District  No.   16  (New  Haven  District) 
New  Haven,  Conn. — District  Office 

Territory:  Louisiana — whole  state;  Mississippi — whole 
state;  Tennessee — west  of  Tennessee  River;  Arkansas 
— whole  state;  Missouri — west  of  and  including  Counties 
Mercer,  Grund}^,  Livingston,  Carroll,  Saline,  Pettis, 
Benton,  Hickory,  Polk,  Greene,  Christian,  Taney;  Kansas 
— whole  state;  Colorado — whole  state;  Wyoming — east  of 
and  including  Counties  Big  Horn,  Washakie,  Natrona, 
Carbon;  Nebraska — whole  state;  South  Dakota — Counties 
Butte,  Meade,  Lawrence,  Pennington  County  west  of 
South  Fork,  Cheyenne  River,  Custer,  Fall  River;  Iowa — 
whole  state;  Illinois — Counties  Jo  Daviess,  Carroll,  White- 
side, Rock  Island,  Mercer,  Henderson,  Hancock;  Ohio — 
northwestern  part  bounded  by  and  including  Counties 
Paulding,  Putnam,  Hancock,  Wyandot,  Crawford,  Huron, 
Erie. 

Local  Offices:  New  Orleans,  La.;  Shreveport,  La.;  Mem- 
phis, Tenn.;  Kansas  City,  Mo.;  Denver,  Colo.;  Omaha, 
Neb.;  Des  Moines,  la.;  Davenport,  la.;  Toledo,  Ohio. 


District  No.   17  (Oklahoma  District) 

Tulsa,  Oklahoma — District  Office 

Territory:     Oklahoma — whole  state. 

Local  Office:     Oklahoma  City,  Okla. 


188        1»K()HLEMS  IN  SALES  MANAGEMP:NT 

District  No.   18  (Eastern  Texas  District) 
Dallas,  Tex.— District  Office 

Territory:  Texas — east  of  and  including  Counties  Harde- 
man, Foard,  Knox,  Haskell,  Jones,  Taylor,  Runnels, 
Concho,  Menard,  Kimble,  Kerr,  Real,  Uvalde,  Zavalla, 
Dimmit,  Webb,  Zapata,  Starr,  Hidalgo,  Cameron. 

Local  Offices:     Fort  Worth,  Texas;  Houston,  Texas. 

Proposed  Office:     San  Antonio,  Texas. 

District  No.   19  (Pacific  States  Division) 
San  Francisco,  Cal. — District  Office 

Territory:  Washington — whole  state;  Idaho — whole  state; 
Montana — whole  state;  Wyoming — west  of  and  including 
Counties  Park,  Hot  Springs,  Fremont,  Sweet  Water;  Utah 
— whole  state;  Nevada — whole  state;  Oregon — whole  state; 
California — whole  state;  Arizona — whole  state;  New 
Mexico — whole  state;  Texas — west  of  and  including 
Counties  Lipscomb,  Cottle,  King,  Stonewall,  Fisher, 
Hemphill,  Wheeler,  Collingsworth,  Childress,  Nolan,  Coke, 
Tom  Green,  Schleicher,  Sutton,  Edwards,  Kinney,  Maver- 
ick; Canada — Provinces  of  Alberta,  British  Columbia, 
Yukon. 

Local  Offices:  Oakland,  Cal.;  Fresno,  Cal.;  Los  Angeles, 
Cal.;  Sacramento,  Cal.;  San  Diego,  Cal.;  San  Bernardino, 
Cal.;  Phoenix,  Ariz.;  Salt  Lake  City,  Utah;  Seattle,  Wash.; 
Spokane,  Wash.;  Tacoma,  Wash.;  Portland,  Ore.;  Boise, 
Idaho;  Butte,  Mont.;  El  Paso,  Tex.;  Reno,  Nev. ;  Van- 
couver, B.  C,  Can.;  Calgary,  Alberta,  Canada. 

Question 
How  should  the  sales  manager  have  redistricted  the 
country  into  five  divisions  so  as  to  accomplish   the 
results  he  desired? 


SALES  PLANNING  AND  RESEARCH  189 

Problem  99 

Determining  Number  of  Accounts  to  be  Handled 

BY  Salesmen 

Among  business  concerns  employing  traveling  sales- 
men, there  is  a  wide  variation  in  the  average  number  of 
customers  handled  by  one  salesman;  likewise,  the 
number  of  salesmen  handled  by  one  branch  manager. 
The  number  of  accounts  handled  by  the  individual 
salesman  will  depend  upon  several  factors,  among 
which  are: 

(1)  Frequency  of  Salesman's  Visits  to  Customers. 
It  is  evident  that  the  traveling  salesman  of  a  local  jobber, 

who  calls  upon  his  trade  once  each  week,  can  reach  a  much 
smaller  number  of  customers  than  the  salesman  of  a  terri- 
torial jobber  who  may  visit  some  of  his  trade  only  every 
two  or  three  weeks.  The  shoe  salesman  visits  customers 
usually  only  twice  each  year  and  can  handle  many  more  ac- 
counts than  the  salesman  for  a  biscuit  manufacturer  who 
visits  customers  every  three  weeks  the  year  around. 

(2)  Location  of  Prospects  or  Customers. 

A  salesman  can  reach  more  customers  of  a  given  type  in 
a  metropolitan  area  than  in  a  rural  district.  Many  types 
of  dealers  vary  closely  in  proportion  to  population.  On 
that  account,  in  the  dense  population  of  the  East,  more 
calls  can  be  made  than  in  certain  far-western  districts  with 
sparse  population.  The  policy  of  the  company  with  respect 
to  distribution  affects  the  relative  location  of  customers  to 
be  called  upon.  With  exclusive  agencies,  each  call  will 
frequently  mean  to  the  salesman  a  trip  between  towns. 
The  degree  of  intensity  of  distribution  also  affects  the 
number  of  accounts  the  salesman  is  able  to  reach  in  the 
course  of  a  month. 

(3)  The  Character  of  the  Product. 

If  it  is  seasonal,  the  visits  will  be  made  only  during  the 
buying  seasons.  If  it  is  a  staple,  standardized  and  well 
known,  then  considerably  less  time  is  necessary  for  the 
salesman  to  handle  the  business  with  each  customer.  On 
the  other  hand,  if  the  product  is  a  new  specialty  requiring 
demonstration,  or  one  of  a  technical  nature  requiring  tests, 
the  number  of  customers  or  prospects  reached  will  be 
decreased  in  proportion  to  the  difficulty  of  selling.  The 
reputation  and  prestige  of  the  selling  concern  will  also  ma- 
terially affect  the  time  necessary  to  make  a  sale;  likewise, 
the  amount  of  preliminary  work  done  by  the  house. 


190        PROBLEMS  IN  SALES  .MANAGEMENT 

(4)  Transportation  Facilities. 

Where  transportation  facilities  are  iKUHjuute,  whore  there 
is  frequent  train  service,  or  in  cases  where  automobiles  are 
availal)l(>,  many  more  accounts  can  1)0  handlod  ordinarily 
than  when  frociuonf  delay  is  caused  by  inadecjuato  trans- 
portation sorvico. 

The  infiuon('(>  of  those  factors  is  reflected  in  the  num- 
ber of  accounts  luuidled  by  salesmen  of  ty])ical  con- 
cerns. The  tire  salesmen  of  a  rubber  company  handle 
on  the  average  60  accounts,  while  the  rubber  footwear 
salesmen  of  the  same  concern  handle  from  350  to  400 
accounts  each.  The  salesmen  of  a  concern  manufac- 
turinfT  adding  machines  and  certain  office  appliances 
may  handle  from  800  to  1,000  accounts.  In  a  furniture 
concern  the  salesmen  handle  from  150  to  200  accounts. 

Questions 

1.  Can  methods  used  in  developing  standard  prac- 
tice in  production  departments  be  applied  to  developing 
standards  for  the  number  of  salesmen  that  can  be  super- 
vised efficiently  by  a  branch  manager  and  the  number 
of  branch  managers  and  salesmen  to  be  directed  by  a 
general  sales  manager,  as  well  as  the  number  of  accounts 
handled  by  the  individual  salesmen? 

2.  Ho\v  should  a  sales  manager  determine  how 
many  accounts  his  salesmen  should  handle? 


Problem   100 

Laying  Out  Salesmen's  Territories,  Routing 

Salesmen 

The  Webster  Rubber  Tire  Company  has  divided  the 
United  States  and  Canada  into  14  districts  with  head- 
quarters in  the  following  cities:  Baltimore,  Boston, 
Chicago,  Cincinnati,  Detroit,  Kansas  City,  Minneapolis, 
New  Orleans,  New  York,  Philadelphia,  Portland, 
Pittsburgh,  San  Francisco  and  Toronto. 


SALES  PLANNING  AND  RESEARCH  191 

The  Detroit  District  consists  of  the  state  of  Mich- 
igan. Also  the  counties  of  Allen,  Dekalb,  Elkhart, 
Kosciusko,  LaGrange,  Marshall,  Noble,  St.  Joseph, 
Steuben,  and  Whitley  in  the  state  of  Indiana.  And  the 
counties  of  Allen,  Cuyahoga,  Defiance,  Erie,  Fulton, 
Hancock,  Henry,  Huron,  Lorain,  Lucas,  Ottawa, 
Paulding,  Putnam,  Sandusky,  Seneca,  Van  Wert, 
Williams  and  Wood  in  the  state  of  Ohio. 

On  the  basis  of  experience,  the  sales  manager  feels 
that  a  salesman  should  not  attempt  to  handle  a  large 
number  of  accounts.  In  the  New  York  District  the 
average  number  of  accounts  per  salesman  is  75 ;  Boston 
District,  iM^;  Kansas  City,  40  (in  process  of  develop- 
ment); Detroit,  38  (in  process  of  development);  Cin- 
cinnati, 62.  Exclusive  representation  is  the  rule  in 
towns  of  less  than  5,000  inhabitants.  Salesmen  call 
upon  accounts  once  each  month.  Wherever  possible, 
the  salesmen  are  so  routed  by  the  company  as  to  permit 
them  to  return  weekly  to  district  or  sub-offices.  Each 
month's  work  consists  of  four  trips  of  a  week's  duration 
each,  the  remaining  working  days  being  spent  at  head- 
quarters in  sales-promotional  work. 

Questions 

1.  Using  an  outline  map  which  shows  county  lines, 
lay  out  salesmen's  territories  within  the  Detroit  District 
and  route  one  of  the  salesmen  traveling  by  rail,  also  one 
traveling  by  automobile. 

2.  Using  such  railroad  guides,  route  maps,  etc.,  as 
may  be  necessary,  locate  the  necessary  sub-offices  in 
the  territory.  There  are  about  500  accounts  in  each 
district. 


192      pkoblI':ms  l\  sali:s  management 

Pkoblkm   101 
Sales  Distuicts 

The  sales  manager  of  the  Baker  Soap  Company,  of 
Boston,  in  planning  a  new  sales  organization,  is  con- 
fronted with  the  pn)})l('m  of  establishing  new  sales 
districts. 

It  is  realized  that  the  number  of  districts  must  be 
sufficiently  large  to  afford  ()j)j)ortunity  for  maintaining 
and  increasing  the  distribution  of  their  products,  but 
not  larger  than  can  be  economically  justified.  For  pur- 
poses of  comparison,  it  is  desirable  that  the  districts 
once  chosen  should  remain  without  change  for  a  consid- 
erable period  of  time  and  that  any  changes  which  might 
be  warranted  by  increase  in  business  should  be  made 
with  least  possible  disturbance  of  territorial  organi- 
zation and  arrangements.  At  the  outset,  the  number 
of  districts  is  to  be  not  less  than  six.  The  population  of 
the  districts  should  be  approximately  equal.  Products 
are  sold  through  drug  stores  and  grocers,  separate  sales- 
men being  used  for  each  class.  Calls  must  be  made 
upon  approximately  80%  of  dealers  in  each  class. 
From  experiment  it  has  been  learned  that  each  sales- 
man can  make  from  200  to  400  calls  per  month,  depend- 
ing on  territory. 

Questions 

1.  Outline  the  districts  which  you  would  advise. 

2.  Prepare  a  set  of  instructions  which  would  show 
a  subordinate  precisely  what  to  do  in  order  to  determine 
number  of  salesmen  necessary;  lay  out  salesmen's 
territories. 


SALES  PLANNING  AND  RESEARCH  193 

Problem  102 
Routing  Salesmen 

The  assignment  of  territories  to  salesmen  of  the 
Curtis  Shoe  Company  has  not  been  made  on  the  basis 
of  state  and  county  Hues.  An  analysis  of  territories  of 
particular  salesmen  shows  considerable  overlapping. 
In  the  main,  each  salesman's  work  is  concentrated  in  a 
certain  area,  but  there  is  a  frequent  crossing  of  routes. 
Ohio,  for  example,  lies  in  the  center  of  areas  covered  by 
five  salesmen,  so  that  there  is  frequent  crisscrossing 
of  routes.  In  the  West,  the  territory  is  more  clearly 
defined,  but  even  there  confusion  of  territories  is  not 
unknown.  Each  salesman  is  given,  at  the  beginning 
of  the  season,  what  is  called  a  territory  book,  with  the 
list  of  exclusive  dealers  whom  he  is  to  call  upon 
and  a  record  of  their  past  purchases.  Transportation 
rates  are  the  deciding  factor  in  laying  down  a  man's 
territory.  Large  cities  are  put  on  separate  routes  and 
visited  by  older  salesmen.  Besides  the  desire  to  have 
the  large  cities  covered  by  the  better  salesmen,  it  is 
found  to  be  necessary  to  visit  these  agents  more  often. 
This  was  especially  true  during  the  recent  period  when 
retailers  in  general  followed  a  hand-to-mouth  buying 
policy.  The  firm  found  that  salesmen  could  not  make 
these  frequent  visits  if  they  were  given  definite  territory 
and  lists  of  small  towns  to  be  covered  within  a  compar- 
atively short  period. 

Question 
What  would  be  the  advantages  of  rearranging  terri- 
tories so  as  to  give  each  man  a  separate  and  distinct 
territory  based  upon  geographical  lines? 


194      imu)HiJ':ms  in  sales  mana(;emp]nt 

Prohlem  103 
Sales  Quotas 

The  Burroughs  Adding  Machine  C'omptiny  has  been 
a  pioneer  in  establishing  quotas  for  salesmen's  dis- 
tricts. These  quotas  are  set  not  on  men,  but  on  terri- 
tories; not  on  district  managers,  but  on  districts.  The 
quotas  constitute,  therefore,  careful  estimates  of  sales 
possibilities.  It  is  stated  that,  in  the  experience  of  this 
company,  at  least  three  factors  should  be  used  in  build- 
ing quotas  for  this  concern  and  in  lines  similar  to  the 
Burroughs;  namely,  merchant  enterprise  statistics, 
population  statistics,  and  past  performance,  or  past 
sales. 

Other  firms,  in  fixing  quotas  for  salesmen  and  terri- 
tories, give  weight  to  such  factors  as  population,  wealth 
of  community,  nature  of  local  industries,  per  capita 
measurements,  records  of  past  sales,  ability  of  salesmen, 
automobile  registrations.  Others  add  a  certain  per 
cent  to  previous  sales  to  determine  quotas  for  future 
sales. 

Questions 

1.  What  factors,  if  any,  should  be  used  in  the 
assignment  of  quotas  by  every  concern  irrespective  of 
nature  of  product? 

2.  Criticize  population  as  a  basis  for  quotas. 

3.  What  are  the  advantages  and  disadvantages  of 
past  performance  exchih^ively  as  a  basis  for  estimating 
future  sales? 

4.  \Miat  considerations  should  enter  into  the  deter- 
mination of  sales  quotas  by  the  Ford  JMotor  Company, 
Conklin  Pen,  Westinghouse  Lamp,  Ignited  Drug,  Alhs- 
Chalmers,  Russia  Cement,  Kelly-Springfield  Tire,  and 
American  ]\Iultigraph  Sales? 

5.  Should  quotas  be  apportioned  equally  over  the 
year? 


SALES  PLANNING  AND  RESEARCH         195 

Problem  104 
Sales  Quotas 

A  company  manufacturing  writing  inks  of  various 
colors,  copying  inks,  glue,  cement,  mucilage,  typewriter 
ribbons  and  carbons,  and  other  specialties,  has  fifty 
domestic  salesmen  under  four  associate  sales  managers 
under  the  direction  of  the  general  sales  manager. 

No  quotas  are  set  for  salesmen,  because  it  is  stated 
that,  since  salesmen  call  upon  retailers,  wholesalers, 
and  jobbers  alike,  no  quota  can  be  set  which  would  be 
of  value  in  measuring  ability  of  salesmen. 

Questioji 
Is  this  a  valid  argument  against  an  effort  to  assign 
quotas? 


Problem  105 

Setting  Quotas  for  Salesmen 

In  1920  and  for  some  years  previous,  it  had  been  the 
practice  of  the  McKenzie  Company  of  Dayton,  Ohio, 
manufacturers  of  low-priced  watches,  to  make  estimated 
production  for  the  year  the  basis  for  the  total  quota  of 
the  sales  organization.  A  certain  percentage  of  increase 
over  the  previous  year  had  always  been  added  to  give 
new  quotas.  Each  of  the  17  different  models  was  as- 
signed to  a  definite  quota,  which  was  distributed  among 
the  branches  in  proportion  to  the  previous  year's  sales. 
Branch  managers  assigned  quotas  to  the  salesmen  on 
the  same  basis.  The  salesman's  quota  on  each  of  the 
17  models  and  his  sales  were  kept  before  him  on  a 
daily  quota  sheet  showing  how  much  he  was  undersold 
or  oversold  on  all  of  them.  Some  salesmen  found  one 
model  very  much  easier  to  sell  than  others.  Usually 
they  would  undersell  on  one  model,  and  oversell  on 
another,  w^hich  the  house  desired  to  push.  The  quota 
plan,  however,  demanded  orders  in  certain  propor- 
tions, and  the  salesmen  governed  themselves  accord- 
ingly.    If  it  so  happened  that  the  salesman  oversold 


19t)        Fl{()liLi:MS  IN  SALKS  MANACiKMENT 

on  a  certain  niodel,  ho  was  short-rated  on  that  particu- 
lar model,  and  over-rated  on  another,  in  order  to  make 
up  the  difference  the  followinp;  month. 

The  nianasenient  had  up  lo  the  time  stated,  however, 
ex])erienced  some  difliculties  in  fairly  assigning  quotas 
to  salesmen.  The  distribution  of  the  product  has  always 
been  effected  partially  through  direct  sales  to  the  retail 
trade  by  a  sales  force  of  nearly  100  men.  The  jobber 
and  the  company  have  sold  to  the  retail  trade  on  the 
same  terms.  It  has  been  the  policy  of  the  company, 
however,  to  avoid  competing  with  the  wholesaler;- 
where  a  retailer  has  traded  with  a  jobber  the  com- 
pany's salesmen  have  been  instructed  to  stay  out. 
Such  a  system  has  been  pursued  because  it  has  been 
thought  that  it  stimulated  the  jobber  to  greater  effort 
and  helped  him  to  introduce  the  line  into  new  stores. 
This  system,  however,  made  difhcult  the  maintenance 
of  quotas  by  salesmen.  Whenever  a  jobber  became 
efficient  he  cut  in  upon  the  trade  of  the  salesman,  who, 
in  turn,  was  to  be  commended  as  he  followed  out  the 
policy  of  the  company  in  avoiding  those  retailers 
dealing  with  the  wholesaler.  When  a  wholesaler  be- 
came aggressive,  as  might  be  expected,  he  secured  the 
salesman's  best  customers.  Again,  during  the  latter 
part  of  1920  the  industrial  depression  cut  down  the 
sales  of  watches  of  this  company  materially,  so  that  the 
scheme  of  quotas  based  on  previous  sales  was  not  satis- 
factor3^ 

The  salesmen  had  for  }'ears  worked  on  a  straight 
salary  basis.  At  the  beginning  of  1921  the  management 
desired,  if  possible,  to  institute  a  system  of  salary  and 
bonus,  in  order  to  stimulate  salesmen  to  greater  effort. 
The  bonus  suggested  was  to  be  a  percentage  on  sales 
above  quota. 

Questions 

1.  W^hat  effect  would  the  financial  condition  of  the 
country  at  the  time  have  had  on  the  fixing  of  quotas  for 
1921? 

2.  What  scheme  could  have  been  adopted  to  adjust 
quotas  to  jobbers'  activities? 


] 


SALES  PLANNING  AND  RESEARCH         197 

Problem  106 
Relation  of  Quota  xIssignments  to  Sales  Districts 

In  fixing  quotas  for  districts  and  for  salesmen,  one  of 
the  most  difficult  problems  is  to  make  proper  allowance 
for  differences  in  sales  districts  and  territories.  Every 
sales  manager  knows  that,  with  an  equal  amount  of 
effort,  a  man  will  get  varying  results  in  different  parts 
of  territory  served  by  any  large  company.  On  the  other 
hand,  the  varying  ability  of  salesmen  so  complicates 
determination  that  most  quotas  contain  a  very  large 
element  of  estimate  and  judgment  on  the  part  of  sales 
executives. 

A  plan  tried  out  by  the  sales  manager  of  a  gas  com- 
pany in  a  large  eastern  city  had  among  its  purposes  the 
securing  of  a  basis  for  judgment  of  both  men  and  terri- 
tories within  this  city.*  The  sales  force  for  the  city  con- 
sisted of  14  men.  The  plan  was  to  concentrate  the 
entire  selling  force  in  each  man's  territory  on  Monday, 
Wednesday  and  Friday  afternoons  during  a  period  of 
14  weeks. 

The  names  of  the  men  were  drawn  by  lot  and,  as 
each  man's  name  was  drawn,  the  district  to  be  worked 
was  listed  in  regular  order.  The  streets  to  be  can- 
vassed, as  well  as  the  appliances  to  be  sold,  were  left 
to  the  representative  in  whose  district  the  men  were 
to  work.  The  men  worked  in  pairs,  each  pair  taking  one 
side  of  a  designated  street. 

The  sales  covered  small,  miscellaneous  and  acces- 
sory appliances,  as  well  as  the  usual  standard  gas 
ranges,  water  heaters,  fixtures,  domes,  indoor  and 
outdoor  arcs,  single  lights,  maintenance  contracts, 
etc.  Prospects  were  prepared  for  the  visits  of  the 
salesmen  through  a  package  of  the  literature  of  the 
company,  which  was  delivered  at  each  house  on  the 
day  previous  to  the  group  canvass.  The  earnings  of 
the  entire  force  were  pooled  and  the  sum  given  to  the 
man  whose  district  was  being  worked.  The  follow- 
ing results  were  obtained  during  the  period : 

*Printers'  Ink. 


198        PHUBLEMS  IN  SALES  MANACIIOMIONT 


Business  Sold  by  Each  Man 

Salesmen  Points  Amount 

A 296  S    367.11 

B 470i  571.66 

C 272i  309.41 

D 278  310.21 

E 220^  223.19 

F 384i  466.38 

G 291  362.21 

H 307  283.16 

1 447  548.31 

J 735  873.16 

K 268  324.91 

L 382  378.28 

M 479  565.93 

N 5611  597.83 

5,392|  $6,181.75 


I 


Salesmen 


Business  Sold  by  Each  Man 


Points 


Amount 


A. 
B. 
C. 
D. 
E. 
F. 
G. 
H. 
I.. 
J.. 
K. 
L. 
M 
N. 


112 

$  134.50 

537 

706.74 

299 

351.85 

443 

474.63 

4261 

380.00 

330 

318.39 

3041 

349.05 

464i 

547.23 

631 

764.93 

1981 

216.53 

340 

392.60 

338^ 

439.00 

386^ 

419.23 

58U 

687.07 

S392i 


86,181.75 


The  totals  of  the  columns  relating  to  points  and 
money  ^'alue  will  agree,  because  all  sales  made  by  any 
man  during  the  two-hour  period  must  show  up  either 
in  his  own  territory  or  in  the  territories  of  other  men 
whose  districts  he  helped  to  work.  The  prospects 
developed  were  worked  to  very  good  advantage  after- 
ward. 


SALES  PLANNING  AND  RESEARCH  199 

Questions 

1.  What  conclusions  are  to  be  drawn  from  these 
records? 

2.  While  it  is  evident  that  the  plan  in  its  entirety  is 
limited  in  its  application,  what  features  might  assist 
the  sales  manager  of  a  large  office  appliance  concern  to 
determine  the  relative  difficulty  of  making  sales  in  the 
different  sales  districts,  so  as  to  be  able  to  judge  properly 
the  performance  of  his  men? 


Problem  107 
Sales  Manual 

The  assistant  sales  manager  of  a  company  manufac- 
turing writing  paper  in  various  colors  and  weights 
favors  the  preparation  of  a  manual  for  its  salesmen. 
This  company  makes  a  specialty  of  business  stationery 
sold  to  business  men  ordinarily  through  printers,  hthog- 
raphers,  and  engravers,  who  in  turn  are  furnished  by 
wholesale  dealers. 

The  salesmen  of  the  company  are,  therefore,  few  in 
number  and  deal  with  wholesalers  almost  exclusively. 

Question 
Prepare  for  the  sales  manager  a  brief  report  giving 
your  reasons  for  desiring  a  manual  and  embodying 
your  recommendations  as  to  form  and  contents  of 
manual  and  method  of  preparation. 


200        lMU)BLEi\IS  IN  SALES  MANAGEMENT 

Piu)1{i-i:m   108 
Sales  Manual 

A  company  manufacturing  a  medium-priced  auto- 
mobile finds,  in  common  with  other  companies,  that  it 
must  issue  for  the  user  a  manual  which  gives  the  main 
points  of  instruction  on  the  car,  things  to  be  observed 
in  its  use,  and  remedies  to  be  adopted  in  case  of  ordinary 
troubles. 

At  the  same  time,  it  finds  that  some  method  must  be 
adopted  of  informing  the  salesmen  in  the  various  agen- 
cies, district  and  local,  through  which  the  company 
sells.  These  agencies  are  not  owned  by  the  company, 
but  each  one  is  under  contract  to  purchase  a  certain 
number  of  cars  per  year  from  the  company  at  dis- 
counts which  are  part  of  the  contract. 

Questions 

1.  What  should  be  included  in  a  manual? 

2.  Should  a  separate  manual  be  prepared  for  the 
salesmen  who  deal  directly  with  consumers? 

3.  If  so,  what  should  it  contain? 

4.  Would  you  include  a  model  sales  talk  to  be  used 
by  retail  salesmen? 


SALES  PLANNING  AND  RESEARCH 


201 


Problem  109 
Sales  Manual 

A   company   manufacturing   work   garments   issues 
annually  a  manual,  of  which  the  following  is  an  outline : 


Sales  Department 


The  origin  of 


(name 


of  the  product). 

Description  of  the  line. 

Duties  of  the  salesmen. 

Questions  and  answers. 

Duties  of  special  salesmen. 

Salesmen's  details. 

Orders. 

Specifications. 

Signed  orders. 

Terms. 

Guaranteed  sales. 

Exclusive  agencies. 

Special  garments. 

Packing  and  shipping. 

Collections. 

Correspondence. 

Mail-order  cards. 

Orders  for  advertising  mat- 
ter. 

Daily  reports. 

Route  lists. 

Salesmen's  mail. 

Copies  of  correspondence. 


Mail  orders. 

Requisition  for  supplies, 
samples,  and  advertising. 

Penmanship. 

Disposition  of  old  samples. 

The  union  label. 

Construction. 

Our  5  X  10  signs. 

Credit. 

Contract. 

Salesmen's  commissions. 

How  to  keep  and  use  records. 

"Dealer  helps"  and  the 
dealer's  help. 

Are  you  a  successful  sales- 
man? 

Factory  vs.  farm. 

Demonstrating. 

The  big  game. 

Advice  to  salesmen. 

Do's  intermingled  with 
dont's. 

Loyalty. 

Helps  in  writing  up  orders. 


Advertising  Department 
The  1920  advertising  campaign. 
Advertising  schedule — 1920. 

Newspapers. 

Farm  papers. 

Children's  garments. 

General  and  trade  publications. 
Inside  promotion  work. 

Question 
Could  the  same  plan  be  adopted  successfully  by  a 
manufacturer  of  women's  suits  and  cloaks? 


202        I'KUBLlvMS  IN  SALES  MANAtiKMENT 

Phomlkm   110 
Sales  Manuals 

The  following  are  brief  outlines  of  sales  manuals  used 
by  various  types  of  concerns : 

(1)  Sales  manual  of  a  concern  manufacturing  a  cal- 
culating machine:  form,  3x6,  looseleaf : 

Section  I.  Manual  of  salesmanship,  including  standard 
demonstration,  common  objections,  standard  answers. 

Section  II.  Machine  manual,  showing  standard  mechani- 
cal demonstration  and  comparison  of  this  machine  with 
other  machines. 

Section  III.  General  instructions  for  managers  and  sales- 
men, giving  briefly  terms  of  sale,  delivery,  guarantees,  and 
the  like. 

Section  IV.  Manual  of  advertising,  purpose,  media, 
most  economical  employment  of  media,  prospect  lists, 
direct-by-mail  advertising,  cooperation  between  salesmen 
and  advertising  department,  and  general  instructions  from 
advertising  department. 

(2)  Sales  manual  of  the  "Bestever"  tractor  division 
of  the  Knollwood  Company,  manufacturing  imple- 
ments : 

Chap.  I. — General  statistics  on  tractors. 
Chap.  II. — Bestever  history  and  qualifications. 
Chap.  III. — Bestever  general  construction. 
Chap.  IV. — Bestever  motor  construction. 
Chap.  V. — Counter  claims  and  objections. 
Chap.  VI. — Cooling  system.     (Service.) 
Chap.  VII. — Carburetion.     (Service.) 
Chap.  VIII. — Ignition.     (Service.) 
Chap.  IX. — Lubrication.     (Service.) 
Chap.  X. — Motor  Mechanism.     (Service.) 
Chap.  XI. — Transmission.     (Service.) 
Chap.  XII. — General  Service.     (Service.) 
Chap.  XIII. — Lubricating  oil. 
Chap.  XIV. — Horsepower  and  metallurgy. 
Chap.  XV. — Bestever  thresher. 
Chap.  XVI. — Knollwood  tractor  moldboard  plow. 
Chap.  XVII. — Knollwood  tractor  disc  plow. 
Chap.  XVIII. — Knollwood  tractor  lister. 
Chap.  XIX. — Knollwood  tractor  disc  harrow. 
Chap.  XX. — Interesting  facts  and  suggestions. 


SALES  PLANNING  AND  RESEARCH         203 

The  manual  is  printed  in  pamphlet  form,  7x9  inches 
in  size. 

(3)  A  concern  manufacturing  electrical  equipment, 
from  the  smallest  to  the  largest  installations,  in  its 
manual  of  the  sales  department  takes  up  the  character 
and  the  duties  of  each  type  of  official  and  member  of 
the  sales  organization,  gives  a  complete  statement  of 
office  practice,  and  set  of  directions  for  handling 
orders  from  the  simplest  to  the  most  complicated  syn- 
dicate installations,  relations  of  the  sales  department 
to  all  the  other  departments;  lastly,  full  instructions  as 
to  the  use  of  all  forms,  reports,  and  control  systems. 
The  result  is  a  book  of  upwards  of  1,000  pages  in 
loose-leaf  form  7x9  inches  in  size. 

(4)  A  manufacturer  of  biscuits  uses  a  small  folder, 
in  which  are  given  with  the  utmost  briefness  general 
suggestions  for  more  sales,  policy  of  the  company, 
prices  and  terms,  handling  orders,  credits  and  collec- 
tions, reports  and  correspondence,  complaints,  and 
selling  points,  the  whole  covering  only  seven  small 
pages. 

(5)  A  company  selling  oil  stoves  gives,  first,  com- 
plete history  of  the  company;  then  the  sales  presenta- 
tion, taking  up  specific  facts  concerning  the  product 
which  every  salesman  should  know.  The  second  sec- 
tion covers  salary,  expenses,  and  commission  accounts. 
The  third  is  concerned  with  advertising,  containing 
sub-sections  on  the  portfolio,  its  value  and  use;  adver- 
tising campaign,  how  to  use  it;  better  sales  plan;  local 
general  advertising,  window  display.  The  fourth  and 
last  treats  of  dealer  cooperation,  including  personal 
salesmanship,  collections,  what  a  salesman  should 
know  about  credits,  the  importance  of  signed  orders, 
"dont's"  to  remember  when  writing  orders,  following 
orders  through  the  factory.  Form — 7  x  9  inches; 
pamphlet. 

Questions 
I.  Criticize  the  above  manuals  from  the  standpoint 
of  content  and  form. 


201        PliOJil.KMS  IN  SALKS  MANAGP^MENT 

2.  Prepare  an  outlino  for  a  manual  for  salesmen  of 
the  Poorc  Company,  the  principal  products  of  which 
are  hard  candies,  soft-stuffed  candies,  cough  drops, 
chocolate  and  cocoa.  Approximately  one-half  of  the 
product  is  sold  in  Chicago.  The  manufactured  jiroduet 
is  delivered  in  trucks  to  retailers  by  the  manufacturer. 
Elsewhere,  the  company  sells  its  product  through 
wholesalers  throughout  the  United  States.  Annual 
volume  of  sales  about  $4,000,000. 

3.  Prepare  outline  of  a  set  of  instructions  for  sales- 
men for  the  new  type  of  Gillette  razor,  bearing  in  mind 
that  the  old  type  is  to  be  sold  at  SI  and  that  the 
Gillette  Company  is  not  to  make  unlimited  adjust- 
ments by  taking  back  old-type  in  exchange  for  new-type 
razors. 

4.  Under  what  conditions  is  it  advisable  to  use  a 
sales  manual? 

5.  How  are  members  of  a  sales  force  to  be  induced 
to  master  the  contents  of  a  sales  manual? 


Phohlkm  111 
Planning  an  Advertising  Campaign 

The  Garfield  Electric  Company  specializes  in  the 
manufacture  of  induction  motors  in  the  larger  sizes, 
from  100  to  500  horsepower;  that  is,  motors  of  the  type 
that  are  usually  used  for  shop  and  similar  require- 
ments. The  business  of  the  company  has  been  built  up 
largely  by  the  substantial  method  of  securing  a  trial  for 
some  of  their  motors  in  large  manufacturing  plants  and 
by  depending  on  the  staff  of  the  manufacturing  plants 
to  produce  larger  orders.  The  electric  motor  field  is 
somewhat  peculiar  in  that  there  are  several  very  large 


SALES  PLANNING  AND  RESEARCH  205 

electrical  companies  making  motors  as  a  part  of  their 
business  and  who,  on  account  of  their  extremely  large 
line  of  apparatus,  have  very  well-known  names.  There 
are  many  smaller  manufacturers  and  a  number  of 
jobbers  who  simply  have  motors  made  for  them  under 
their  own  nameplates.  The  consequences  are  that  any 
of  the  small  manufacturers  are  likely  to  be  regarded  as 
merely  jobbers. 

The  Garfield  sales  plan  consists  in  selling  motors  to  a 
large  extent  to  manufacturers  of  large  machinery,  such 
as  elevators,  pumps,  hoists,  machine  tools,  etc.  This 
plan  was  adopted  for  several  reasons.  In  the  first  place, 
not  enough  care  has  been  used  in  getting  exactly  the 
right  size  motor  for  a  machine,  with  the  result  that 
motors  have  been  too  large  and  power  has  been  wasted. 
In  the  second  place,  the  logical  way  to  buy  a  motor  is 
to  buy  it  for  the  machine  for  which  it  is  intended.  The 
two  pieces  of  equipment  are  absolutely  interrelated  and 
by  buying  them  together  the  buyer  centralizes  the 
responsibility  for  the  good  operation  of  the  tool  in  one 
place.  It  also  permits  the  manufacturer  of  the  machine 
to  fit  his  machine  at  the  time  it  leaves  the  shop,  with  a 
motor  which  he  knows  to  be  satisfactory.  Since  any 
machinery  manufacturer  has  to  apply  a  number  of 
motors  in  a  year,  it  pays  the  company  to  have  men  who 
are  specialists  in  motor  application  make  a  thorough 
study  of  each  machinery  manufacturer's  requirements, 
which  could  not  be  done  if  it  were  simply  a  case  of 
applying  a  motor  to  one  individual  machine  in  some- 
body's shop. 

The  company  is,  however,  meeting  with  considerable 
sales  resistance,  due  to  the  fact  that  the  company  is 
not  as  well  known  as  its  competitors.  It  is  proposed 
that  this  be  remedied — 

(a)  By  sending  out  a  letter  per  month  to  2,500 
machinery  manufacturers,  making  about  30,000  for 
the  year. 

(6)  By  sending  out  some  15,000  catalogs  and 
100,000  circulars. 


206        PHOHLKMS  IN  SAI>KS  MANAGEMENT 

(c)  By  ad\'crtisinf2;  in  the  Saturday  Evening  Post 
and  Literary  Digest  so  as  to  get  at  experts  and 
advisers,  consulting  engineers,  contractors,  archi- 
tects, and  central  stations.  Because  of  the  large 
appropriation,  the  magazine  advertising  is  con- 
sidered the  keystone  of  the  campaign. 

Questions 

1.  What  investigation  should  be  made  before  under- 
taking the  proposed  campaign? 

2.  Should  the  sales  manager  approve  of  the  expen- 
diture of  the  S50,000  required  for  this  campaign? 

3.  What  stejis  should  be  taken   to   plan   the   cam- 
paign? 


Pkoblkm  112 
Planning  to  Secure  Coordination  or  Sales 

AND   PrODUC'TIOX 

A  concern  manufacturing  cheese-cloth  for  domestic 
use,  bandages  of  all  kinds,  jeweler's  cotton  and  absor- 
bent cotton  is  confronted  with  the  problem  of  securing 
more  satisfactory  coordination  of  sales  and  production. 
The  raw  material  constitutes  the  major  portion  of  the 
manufactured  cost  of  the  product ;  and,  since  the  cotton 
market  is  a  highly  speculative  one,  the  selling  price  of 
the  finished  product  of  the  company  fluctuates  with 
the  spot  price  of  raw  cotton.  The  larger  customers  for 
the  companj^'s  product  closely  follow  the  cotton 
market.  A  change  in  the  price  of  raw  material  makes  a 
sudden  change  in  the  demand  for  the  finished  product 
in  both  quantity  and  grade.  In  case  the  market  is 
high,  only  the  cheapest  grades  of  cheese-cloth  are  pur- 
chased and  in  smaller  quantities:  but  as  soon  as  the 


SALES  PLANNING  AND  RESEARCH         207 

price  drops  even  a  small  amount,  there  is  an  active 
demand  for  better  grades.  The  demand  is,  therefore, 
a  very  fluctuating  one. 

The  following  table  of  orders  for  the  first  12  weeks 
of  1921  is  illustrative: 


''eek,  ending 

Orders  in  yards 

Jan.  1 

489,285 

8 

852,438 

15 

1,514,672 

22 

1,300,330 

29 

904,760 

Feb.  5 

1,873,892 

12 

1,986,408 

19 

717,748 

26 

560,136 

Mar.  5 

1,488,403 

12 

807,440 

19 

2,028,885 

Very  large  inventories  would  make  it  possible  to 
satisfy  customers'  immediate  demands  at  peak  periods, 
but  the  carrying  of  large  inventories  is  inadvisable  be- 
cause, if  large  stocks  happen  to  be  left  in  the  store- 
room, losses  through  fluctuations  in  raw  material  may 
result.  Furthermore,  it  seems  that  no  change  in  organi- 
zation can  satisfactorily  handle  this  situation.  The 
problem  has  been  put  up  to  the  sales  department  to 
find  a  solution  if  possible. 

Question 
Would  sales  research  or  planning  assist  in  solving 
the  problem? 


2()s      i'iu)Hli-:ms  in  sali<:s  management 

PltOBLKM     118 

SciiKDULiNG  Shipment 

Tlio  Pemi  Paper  Box  Company  is  located  in  one  of 
the  suburbs  of  Phila(lcli)hia.  Its  product  consists  al- 
most entirely  of  small  ('ardl)oard  boxes  used  as  con- 
tainers for  various  kinds  of  package  goods.  For 
example,  among  its  products  at  the  present  time  are 
candy  boxes,  soap  containers,  packages  for  teas  and 
coffees,  and  boxes  of  various  sizes  to  hold  different  types 
of  dry-goods.  Because  of  the  bulk  of  the  made-up 
boxes  the  market  is  restricted  to  local  territory. 

The  competition  in  this  industry  is  very  keen,  but 
by  holding  to  a  high  standard  of  business  ethics  and  by 
persistent  effort  the  Penn  Company  has  been  able  in 
20  years  to  grow  from  very  meagre  beginnings 
until  now  it  is  one  of  the  largest  and  strongest  paper 
box  firms  in  its  section.  In  spite  of  its  strong  position, 
however,  the  management  must  continually  face  the 
problem  of  meeting  the  competition  not  only  of  several 
large  concerns,  but  of  numerous  small  factories. 

All  boxes  are  made  according  to  specifications  given 
by  the  customer,  while  the  printed  wrappers  pasted 
over  the  rough  cardboard  are  furnished  by  the  cus- 
tomer. For  this  reason  boxes  are  made  only  when  an 
order  is  received  or  when  a  customer  takes  boxes  of  a 
certain  kind  continuously.  The  most  valuable  custom- 
ers are  those  manufacturers  and  distributors  who  call 
for  such  a  continuous  supply  of  a  certain  type  of  box. 

A  problem  in  the  management  of  the  Penn  Company 
is  that  of  bringing  a  proi)er  coordination  between  sales 
and  production.  Considerable  saving  is  effected  by 
putting  large  orders  through  the  factory.  As  far  as 
possible,  a  definite  schedule  for  at  least  a  week  is  kept, 
but  the  sales  department  is  continually  breaking  into 
this  schedule.  Customers  call  the  factory,  stating  that 
a  special  type  of  box  is  desired  and  demand  delivery 
within  a  day  or  two.  Often  these  rush  orders  come 
from  the  largest  customers  of  the  concern,  those  who 
take  regular  supply  of  a  standard  box.  The  sales 
department  hesitates  to  refuse  these  demands  for  fear 


SALES  PLANNING  AND  RESEARCH  209 

of  losing  trade.  The  attitude  of  certain  customers  is 
reflected  in  the  statement  of  one  who  said  "If  you  do 
not  do  this  for  me,  the  Jones  Box  Company  will." 
These  demands  for  rush  orders  are  a  frequent  occur- 
rence. As  stated,  the  production  schedule  is  upset  and 
costs  are  raised,  while  at  the  present  time,  June,  1921, 
when  the  factory  is  running  only  four  or  five  days  a 
week,  it  is  sometimes  necessary  to  call  in  workers  on 
the  days  when  the  plant  is  closed  and  start  the  machin- 
ery simply  to  meet  such  demands. 

Question 
What  measure  should  be  taken  to  remedy  this  sit- 
uation? 


Problem  114 

Coordination  of  Sales  and  Purchases  in 

Wholesale  Dry-Goods  Concern 

The  practice  of  James  Kennicott  &  Company,  a 
large  wholesale  dry-goods  concern,  is  to  place  advance 
orders  for  women's  flannelette  underwear  in  the  latter 
part  of  December  or  early  part  of  January  for  the 
following  fall  and  winter  seasons.  This  advance  order 
is  normally  for  about  65%  of  the  preceding  year's 
business.  The  salesmen  then  go  out  on  the  road  and 
take  advance  orders  from  customers  during  February 
and  the  following  months.  These  advance  sales  give 
a  check  on  the  advance  purchases  and  determine  the 
amount  to  be  reordered.  Shipments  to  customers  are 
made  between  August  15  and  October  15 — the  bulk 
between  September  15  and  October  15. 

In  1920,  $100,000  of  this  underwear  was  sold.  This 
represented  nearly  double  the  annual  sales  of  a  normal 


210        PHOIUJ'.MS  IX  SALES  MANAGEMENT 

pre-war  year,  as  far  as  money  is  concerned,  but  was 
little  more  in  quantity.  The  largest  part  of  the  sales 
were  nuide  ei{2;ht  niontiis  before  delivery,  when  there 
was  a  rising  market  and  a  very  brisk  demand.  In  the 
four  months  preceding  delivery,  there  was  a  continuous 
decline  in  |)ri('es,  and  in  the  fall  customers  were  very 
reluctant  to  accept  the  goods  for  wliich  they  had  pre- 
viously placed  orders. 

A  mild  winter  followed.  Moreover,  retailers  were 
slow  in  marking  down  prices,  so  that  there  was  more 
than  a  normal  carry-over  of  stock  on  retailers'  shelves. 
In  January,  1921,  the  basic  price  of  material  for  the 
product  was  60%  lower  than  in  the  preceding  season. 

Questions 

1.  What  should  be  the  amount  of  the  advance 
order  in  1921  for  this  type  of  merchandise? 

2.  What  information  should  the  sales  department 
furnish  to  the  buying  department  as  a  basis  for  decision? 


Problem  115 

Sales  Campaigns* 

(a)  A  cooperative  marketing  association  of  Cali- 
fornia prune  growers  has  distributed  the  product  of  its 
members  through  the  usual  channels,  utilizing  the 
services  of  brokers  in  most  of  the  important  markets. 
It  is  suggested  that  the  prunes  be  packed  in  convenient 
containers  of  one-pound,  two-pound  and  five-pound 
sizes  and  that  a  selling  campaign  be  inaugurated  to 
secure  widespread  distribution  and  sale.  There  seems 
little  doubt  that  $200,000  working  capital  could  be 
secured  for  this  purpose. 

Question 
Prepare  a  brief  statement  indicating  what  is  involved 
in  planning  and  executing  such  a  campaign. 

*Upon  Salee  Campaigns,  see  also  Problems  187,  188,  321. 


SALES  PLANNING  AND  RESEARCH  211 

(6)  The  Sudbury  Manufacturing  Company  of 
Springfield,  Massachusetts,  has  for  many  years  manu- 
factured large  amounts  of  mop  heads,  wiping  cloths, 
clothes  lines,  twine,  and  other  products  out  of  cotton 
yarn. 

In  1920  the  company  had  five  plants  located  in 
Massachusetts  and  Connecticut.  Its  products  were 
sold  throughout  the  United  States  through  whole- 
salers, who  in  turn  handled  the  retail  trade.  It  was 
found  that  the  mops  were  sold  chiefly  through  hard- 
ware and  house-furnishing  stores,  seldom  if  ever 
through  grocery  stores.  The  new  sales  executive  of 
the  company  asserts  that  the  grocery  stores  furnish  a 
vastly  greater  outlet  than  the  other  types  of  stores 
and  that  the  company  should  undertake  an  intensive 
campaign  in  a  large  city,  with  a  view  to  developing  this 
market.  It  is  also  proposed  that  the  mops  be  stand- 
ardized, trade-marked,  and  wrapped  in  packages  that 
can  be  put  on  display  shelves. 

Questions 

1.  How  should  the  intensive  campaign  be  planned? 

2.  How  is  the  work  of  salesmen  to  be  correlated 
with  advertising? 


PART  IV 
SALES  POLICIES 


PART  IV 

SALES  POLICIES 

OUTLINE 

A.  Policies  Relating  to  Product. 

1.  Guarantees  of  product  as  to  quality,  durability, 

and  service  rendered. 

2.  Selection  of  products  for  manufacture;    full  line 

versus  specialties. 

3.  Policies  as  to  change  of  style;   new  products. 

4.  Policy  as  to  service;    repair  parts,  repair  service. 

5.  Brand  policy;   private  brands  versus  manufactur- 

er's brands;    "family"  brands. 

B.  Policies  Regarding  Methods  of  Distribution. 

1.  Exclusive  dealer  policy. 

2.  Policy  toward  newer  types  of  middlemen:    mail- 

order houses,   chain   stores,  self-service   stores, 
cooperative  jobbers. 

3.  Policy  toward  wholesale  consumers ;  contract  sales. 

4.  Sales  contracts. 

C.  Price  Policies. 

1.  Price  levels. 

(a)   Zone  prices;  geographical  equaUzation. 
(6)    Delivery  or  f .  o.  b.  prices. 

2.  Cash  discounts. 

3.  Uniformity  of  selling  prices;   one-price  policy. 

4.  Trade  discounts. 

5.  Quantity  discounts. 

6.  Maintenance  of  resale  prices. 

7.  Guarantee  against  price  decline. 

8.  Drop  shipment  policy. 

9.  Price  policy  in  sales  for  future  dehvery. 

215 


216        PROBLEMS  IN  SALES  MANAGEMENT 

n.     CuKDiT  Policy. 

L  Lcn^;lli  ol  cii'ilit  ti'rni.s. 

2.  Methods  of  ('xt(Muliiig  credits:    aeceptuiu'c,  opoTi 

account,  sif^lit  draft,  sales  note,  etc. 
;■{.  Collection  policy':   collections  and  outstandings. 

E.  Advertisino   Polk  v. 

1.  Size  of  api)fopiiation. 

2.  Appeals. 
•A.  Media. 

F.  Policies  Tow.vud  Customers. 

1.  Returned  floods. 

2.  Cancelations. 

3.  Claims  and  allowances. 

4.  Cooperation  with  salesmen  in  sellinjr  goods;  tlealer 

helps. 

Ci.      Policy  Towahd  Co.mpkiitors. 


GENERAL  QUESTIONS* 

A.     Policies  Relating  to  Product. 

Shall  a  manufacturer  or  jobber  guarantee  the  products  he 
sells  as  to  quality,  durability  or  service  rendered?  If  so, 
should  this  take  the  form  of  a  written  guarantee?  Is  the 
sales  advantage  from  an  unqualified  guarantee  sufficient 
to  offset  the  dangers  of  abuse?  What  should  be  the  policy 
of  the  manufacturer  with  reference  to  goods  returned 
under  an  indefinite  guarantee? 

What  policies  should  a  manufacturer  adopt  with  reference 
to  the  selection  of  products  for  manufacture?  Is  it 
1^  advisable  for  a  manufacturer  to  add  products  in  order  to 
complete  his  line,  either  by  manufactui-ing  them  himself 
or  by  purchase?  Will  the  addition  of  such  products  tend 
to  nullify  the  advantage  of  specialization? 

What  policy  should  a  manufacturer  adopt  as  to  change 
of  style?  Should  he  be  conservative,  attempt  to  keep  up 
to  the  minute,  or  produce  models  or  styles  which  change 
little?  What  should  be  the  policy  of  the  company  toward 
new  products;  toward  products  the  demand  for  which  is 
a  result  of  fad? 

What  should  be  the  policy  of  a  company  with  regard  to 
service  in  connection  with  its  product,  particularly  where 


I 


SALES  POLICIES  217 

it  happens  to  be  a  complicated  product?  Should  repair 
service  policy  be  made  a  selling  point? 

What  should  be  the  policy  of  the  manufacturer  toward 
identification  of  his  product?  Should  he  establish  his 
own  brand  or  make  his  goods  under  brands  designated  by 
buyers — so-called  "private  brands"?  What  should  be 
the  attitude  of  the  wholesaler  toward  private  brands? 

What  should  be  the  attitude  of  the  manufacturer  of 
established  brands  toward  private  brands  of  competing 
goods?  Under  what  conditions  is  it  advisable  to  adopt 
a  "blanket  brand"?  Is  it  good  policy  to  use  more  than 
one  brand  for  the  same  quality  of  product?  Should  the 
same  brand  be  used  for  different  qualities? 

B.  Policies  Regarding  Methods  of  Distribution. 

What  policy  should  be  adopted  with  reference  to  dealing 
through  middlemen?  Should  the  manufacturer  sell 
through  exclusive  jobbers  or  should  he  establish  exclusive 
dealer  relations  with  retailers?  What  should  be  the 
policy  (a)  of  the  manufacturer  (b)  of  the  wholesaler 
toward  mail-order  houses,  chain  stores,  self-service  stores, 
cooperative  stores,  cooperative  jobbers? 

If  the  exclusive  dealer  policy  is  adopted,  should  contracts 
be  used? 

C.  Price  Policies. 

How  should  goods  be  priced — at,  above,  or  below  market 
prices? 

Should  prices  be  quoted  to  include  delivery  or  should  they 
be  quoted  f.  o.  b.  plant?  To  what  extent  should  prices 
quoted  provide  for  geographical  equalization? 

What  policies  should  be  adopted  toward  cash  discounts? 

Should  selling  prices  be  uniform  for  all  buyers,  regardless 
of  credit  standing?  Should  salesmen  be  allowed  to  cut 
prices  in  order  to  meet  competition?  Should  prices  be 
quoted  net  or  with  trade  discounts?  On  what  basis  should 
jobbers'  prices  be  granted?  Should  a  distinction  be  made 
between  jobbers'  and  retailers'  prices  on  the  same  quantity 
of  purchase?  Is  it  wise  to  give  jobbers'  discounts  to  large 
resale  purchasers  such  as  department  stores  and  chain 
stores? 

What  should  be  the  attitude  of  the  manufacturer  toward 
identifying  goods?  Toward  fixation  of  resale  prices? 
Should  he  adopt  a  policy  of  refusing  to  sell  to  price  cutters? 


218        PROBLEMS  IN  SALES  MANAGEMENT 

What  are  the  advantages  and  disadvantages  of  guarantee 
against  price  decline  from  the  view-point  of  (a)  the 
manufacturer  (1))  tlie  wholesaler?  Can  a  manufacturer 
refuse  to  guarantee  prices  against  decline  if  the  prac- 
tice is  general  in  his  trade?  What  policy  should  be 
adopted  toward  drop  shipments? 

D.  Credit  Policy. 

What  should  he  the  i)olicy  of  an  enterprise  with  regard 
to  extension  of  credit?  Should  the  general  terms  of  the 
trade  be  adopted?  What  policy  is  to  be  chosen  with 
regard  to  trade  acceptances? 

What  should  be  the  policy  of  the  sales  department  with 
regard  to  the  handling  of  collections? 

E.  Advertising  Policy. 

What  should  be  the  policy  of  the  company  toward  adver- 
tising? What  policy  with  regard  to  fixing  advertising 
appropriations  is  to  be  considered  sound? 

To  whom  should  advertising  appeal  be  made — to  con- 
sumers or  to  middlemen?  If  the  product  is  one  used  by 
other  manufacturers,  should  advertising  be  directed 
toward  the  consumers  of  other  manufacturers'  products 
or  indirectly  to  stimulate  sales? 

F.  Policies  Toward  Customers. 

How  should  the  company  deal  with  the  returning  of  goods 
by  buyers?  Under  what  conditions  are  cancelations  to 
be  accepted,  if  at  all? 

Are  claims  and  allowances  to  be  made  on  a  liberal  basis 
on  the  assumption  that  "the  customer  is  always  right"? 
If  not,  w^hat  other  basis  is  to  be  adopted? 

G.  Policy  Toward  Competitors. 

What  policy  is  to  be  adopted  toward  competitors?  Is 
cooperation  with  competitors  within  legitimate  fields  to 
be  encouraged  or  discouraged? 

•Consult  J.  G.  Frederick,  Modern  Salesmaiuigetnent,  D.  Appleton  & 
Company;  C.  S.  Duncan,  Marketing:  Its  Problems  and  Methods,  D. 
Appleton  &  Company,  Chapter  XVII;  A.  W.  Shaw  Company,  Organiz- 
ing/or Increased  Sales,  Chapters  VI,  VIII  and  IX;  Henry  S.  Bunting, 
Added  Lines  in  Modern  Merchandising;  R.  P.  Ettinger  and  D.  E.  Golieb, 
Credits  and  Collections,  Prentice-Hall,  Inc.;  CurtivS  Publishing  Com- 
pany, Selling  Forces;  Tipper,  Hollingworth,  Hotchkiss  and  Parsons,  Ad- 


SALES  POLICIES  219 

Problem  116 
Guarantee  and  Replacement  Policy 

The  Garrison  Tool  Company,  of  Cincinnati,  Ohio, 
is  one  of  the  large  manufacturers  of  saws,  files  and 
builders'  tools,  an  old,  established  concern,  producing 
a  quality  product.  Almost  since  the  beginning,  the 
policy  of  the  company  has  been  to  include  in  all  its 
catalogs,  and  in  its  advertising  and  statements  to 
the  trade,  a  general  guarantee  against  defect  in  mate- 
rial and  workmanship  of  its  product.  Further,  the 
statement  that  "This  Article  Carries  Garrison's  Fullest 
Guarantee"  appears  on  many  articles. 

The  management  in  recent  years  has  often  been 
confronted  with  the  problem  of  administering  this 
guarantee  in  the  case  of  hand  saws.  The  proper 
functioning  of  a  saw  is  largely  dependent  upon  its 
sharpening,  and  especially  upon  its  setting.  Often 
those  who  are  supposed  to  be  trained  mechanics 
cannot  correctly  sharpen  and  set  the  saws  with  which 
they  work. 

From  time  to  time  the  management  has  received 
saws  from  a  wholesaler  asking  replacement.  The 
wholesaler  has,  in  turn,  made  replacement  for  a  retailer 
who  has  exchanged  the  saw  for  a  consumer  upon  the 
strength  of  the  company's  guarantee  policy.  Often 
these  returned  saws  have  shown  that  they  have  re- 
ceived years  of  use,  or  excessive  abuse.  In  almost  all 
cases  sharpening  and  setting  by  a  factory  mechanic 
proves  that  the  saws  are  not  defective.  In  1919, 
the  management  considered  revision  of  its  guarantee 

vertising:  Its  Principles  and  Practice,  Ronald  Press  Company;  P.  T. 
Cherington  Advertising  as  a  Business  Force,  Doubleday,  Page  & 
Company.  Relative  to  price  fixing  and  price  policy,  general  works 
upon  economics  by  F.  VV.  Taussig,  Richard  Ely,  Thomas  N.  Carver, 
Alfred  Marshall  and  others  may  be  consulted  to  secure  the  economic 
basis  of  prices  and  price  fixing.  Price  maintenance  is  treated  in  the 
doctoral  dissertation  of  C.  T.  Murchison,  Resale  Price  Maintenance, 
Columbia  University;  by  F.  W.  Taussig  in  the  American  Economic 
Revieiv;  Paul  W.  Ivey,  Elements  of  Marketing,  Ronald  Press  Company; 
H.  R.  Tosdal,  American  Economic  Review,  March  and  June,  1918, 
and  Quarterly  Journal  of  Economics,  November,  1915.  A  partial  list 
of  the  numerous  articles  in  Printers'  Ink,  Sales  Management,  Sales  Man- 
ager, System,  Advertising  and  Selling  and  other  periodicals  is  given  in 
tne  bibliography. 


220        PROBLEMS  IN  SALES  MANAGEMENT 

policy  to  avoid  the  abuses  and  expense  to  which  the 
company  was  l)eing  su))j('cte(l. 

Questions 

1.  Should  the  company's  guarantee  on  saws  have 
been  made  more  definite? 

2.  What  degree   of  pul)licity   should   be   given   the 
guarantee? 

3.  What  policy  should  have  been  adopted  of  admin- 
istering the  guarantee  and  in  making  replacements? 


Problem  117 
Guarantee  Policy 

The  Giller  Watch  Company,  of  Orange,  New  Jersey, 
is  a  large  manufacturer  of  low-priced  watches.  In  the 
distribution  of  its  product  the  company  uses  selected 
jobbers,  but  sells  direct  to  the  retailer  upon  the  same 
terms  as  does  the  jobber.  The  watches  are  sold 
through  many  types  of  outlet,  such  as  jewelry  stores, 
hardware  stores,  drug  stores,  general  stores,  stationery 
stores  and  novelty  stores. 

It  has  always  been  the  policy  of  the  company  to  give 
a  specific  guarantee  upon  its  product.  At  one  time 
it  was  administered  through  the  dealers,  but  several 
years  ago  the  company  changed  its  policy.  The 
following  statement  pasted  in  the  back  of  each  watch 
briefly  explains  the  method : 

This  Giller  watch  is  guaranteed  to  keep  good  time  for 
one  year,  and,  if,  without  misuse,  it  fails  to  do  so,  will  be 
repaired  l)y  us  free;  mainsprings,  cleaning,  hands,  and  dials 
excepted.  Wrap  carefully,  enclose  10  cents  for  booking, 
packing,    postage,    and    insurance.     Put    your    name    and 


I 


SALES  POLICIES  221 

address  on  the  package.     Valid  only  if  dated  and  signed  by 
the  dealer  when  sold. 

(Space  for  date  of  sale  and  signature  of  dealer) 

The  Giller  Watch  Company 
Orange,  New  Jersey 

After  the  first  year,  or  if  the  watch  has  been  misused, 
return  it  to  us  and  we  will  inform  you  what  the  repairs  will 
cost.     This  watch  is  not  exchangeable. 

To  handle  repairs  on  watches  and  make  exchanges, 
a  service  department  was  set  up.  Many  difficulties, 
however,  developed.  There  were  frequent  misunder- 
standings with  the  consumer.  Frequently  watches 
showed  abuse,  and  when  the  company  made  a  charge 
for  repairs,  the  customer  resented  it.  In  other  cases, 
dates  of  sale  were  not  filled  in  by  dealers  and  inquiries 
regarding  this  matter  caused  hard  feeling.  The  length 
of  time  necessary  for  exchange  caused  an  inconvenience 
to  which  many  buyers  made  strenuous  objection. 
Many  dealers,  in  order  to  maintain  the  good  will  of 
customers,  exchanged  watches  for  them  and  then  called 
upon  the  company  for  adjustment.  Misunderstand- 
ings thus  developed  both  with  dealers  and  consumers. 
Late  in  1921  the  management  took  under  consideration 
a  change  in  guarantee  policy. 

Question 
What  policy  should  have  been  adopted? 


222        PROBLEMS  IN  SALES  MANAGEMENT 

1*k()iili:m   118 
Guarantee  of  Product 

A  candy  manufacturer  making  a  quality  line  of 
chocolates  and  bonbons  has  received  numerous  re- 
quests from  retailers  for  guarantee  against  defective 
or  stale  goods.  The  opinions  of  several  manufacturers 
as  to  such  guarantees  are  expressed  in  Advertising  and 
Selling  * 

The  Huyler  Company  uses  an  unqualified  guarantee; 
they  say,  "If  you  find  that  candies  you  buy  of  our  make 
do  not  come  up  to  your  fullest  expectation  for  any 
reason,  the  goods  will  be  replaced."  The  following 
statement  by  their  sales  manager  emphasizes  this: 

We  make  delicate  candy  subject  to  quick  damage  if 
subjected  to  any  unusual  treatment.  Every  consumer  is 
entitled  to  receive  a  perfect  l)ox  of  candy,  no  matter  where 
or  when  he  buys  it.  Hence,  we  consider  our  guarantee  slip 
an  essential  step  in  our  effort  to  wholly  please  every  person 
who  buys  Huyler's  candies.  We  have  no  memory  of  this 
guarantee  ever  having  been  abused  by  retailers  or  ever 
having  been  taken  advantage  of  by  consumers.  Letters  we 
have  received  from  consumers  reporting  the  receipt  of 
damaged  candy  have  invariably  been  most  fair  in  tone  and 
have  been  of  great  assistance  to  us  in  correcting  the  trouble 
responsible  for  the  unsatisfactory  condition  of  the  candy. 
Returns  b}'  reason  of  the  guarantee  slip  or  for  any  other 
reason  have  been  so  small  as  to  be  wholly  inconsequential. 

Along  the  same  line,  the  Belle  Mead  Sweets,  Inc., 
of  Trenton,  N.  J.,  gives  an  unqualified  guarantee, 
saying  further: 

We  believe  this  is  the  greatest  form  of  advertising  we 
have,  for  usually  we  send  a  higher-priced  package  or  a 
package  of  larger  size  to  the  comi)lainant.  writing  him  a 
letter  relieving  the  dealer  of  all  responsibility  and  taking  the 
opportunity  to  write  an  explanation  to  him,  telling  of  the 
purity  and  cleanliness  of  our  factory.  We  know  that  in 
almost  ever}'  case  we  make  a  stronger  customer  for  Belle 
Mead  Sweets  and  even  for  the  store  in  which  he  made  the 
purchase. 

Stephen  H.  Whitman  &  Son,  of  Philadelphia,  have 
the  following  policy: 

♦January  10,  1920. 


SALES  POLICIES  223 

We  place  in  all  of  our  standard  packages  a  guarantee 
which  we  desire  to  make  as  broad  as  possible.  This  card  is 
enclosed  in  millions  of  packages  every  year,  and  I  would 
estimate  that  we  do  not  receive  two  dozen  complaints  from 
the  public  in  the  year.  We  feature  this  guarantee  in  our 
magazine  advertising  from  time  to  time,  and  we  think  it  is 
absolutely  essential  to  protect  our  products  in  this  way. 
If  a  box  of  chocolates  is  exposed  to  the  direct  sun  in  shipment 
or  even  in  the  dealer's  store  for  even  a  short  time  in  hot 
weather,  it  will  certainly  deteriorate  and  will  not  be  worth 
the  price  the  consumer  has  to  pay.  Since  we  cannot  guar- 
antee against  deterioration,  the  best  we  can  do  is  to  guarantee 
against  loss.  We  will  cheerfully  mail  a  fresh  package  in 
place  of  the  one  complained  of  and  be  glad  of  the  oppor- 
tunity. 

Question 

Is  the  experience  of  the  above  firms  to  be  taken  as 
sufficient  guide  for  the  new  candy  manufacturer  in 
determining  a  policy? 


Problem  119 
Product  Guarantee 

In  the  sale  of  rubber  tires  for  automobiles,  it  has 
been  customary  for  prominent  manufacturers  to  give  a 
guarantee  varying  to  some  extent  with  the  company  and 
with  the  price  paid  for  the  tire.  While  because  of  the 
improvements  in  manufacture  of  tires  the  guaranteed 
mileage  has  been  increased,  there  has  developed  a  very 
keen  opposition  among  manufacturers  to  selling  auto- 
mobile tires  with  mileage  guarantees.  One  well-known 
manufacturer  has  gone  so  far  as  to  withdraw  entirely 
his  mileage  guarantee  and  give  a  simple  guarantee  of 
satisfaction,  much  as  would  be  given  by  any  manu- 
facturer who  stood  behind  his  product.     Companies 


224        PROBLEMS  IN  SALES  MANAGEMENT 

attoniptinp;  to  maintain  mileage  f];uarantees  always 
find  fireat  (lifliculty  in  makinfj;  adjustments,  and  the 
expense  of  exchanges  and  adjustments  is  very  con- 
siderable. Because  of  competition,  adjustments  have 
been  made  very  leniently.  The  dealer  hesitates  to 
antagonize  the  consumer  by  refusing  to  take  his  word 
for  the  amount  of  use,  while  the  manufacturer  hesitates 
in  turn  to  antagonize  the  dealer  by  refusing  to  accept 
the  adjustments  made  by  the  dealer  with  the  consumer. 
The  De  Pugh  Rubber  Company  manufactures  a 
medium-grade  fibre  tire,  which  it  guarantees  for  3,500 
miles.  Although  a  large  proportion  of  tires  give 
more  service  than  this  minimum,  the  company  feels 
that  a  conservative  policy  must  be  followed  in  mileage 
guarantee.  Nevertheless,  it  has  felt  that  there  has 
been  abuse,  that  tires  have  been  returned  and  ex- 
changed which  gave  no  evidence  of  defective  workman- 
ship on  the  part  of  the  factory.  The  company  is  con- 
sidering the  adoption  of  a  policy  of  not  making  a 
specific  guarantee,  but  standing  back  of  the  goods  in- 
so-far  as  they  fail  to  give  service  because  of  faults  or 
defects  in  workmanship.  Furthermore,  they  plan  to 
make  their  stand  known  to  the  public  through  an 
advertising  campaign,  in  which  the  statement  will 
appear  that  the  abuse  of  guarantee  adds  materially  to 
costs,  and  therefore  to  prices  charged  for  tires.  Be- 
cause the  guarantee  of  this  company  will  not  be 
administered  on  a  so-called  false  basis,  it  is  expected 
that  lower  prices  can  be  quoted. 

Questions 

1.  Is  the  change  in  policy  a  sound  one? 

2.  How  would  it  affect  the  volume  of  sales? 


SALES  POLICIES  225 

Problem  1^0 
Policy  as  to  Quality  of  Product — Union  Label 

The  Mann  Company,  which  manufactures  shirts 
under  a  well-known  brand,  is  an  old,  established  firm 
with  main  offices  in  one  of  the  New  England  cities. 
The  company  has  always  put  its  product  upon  a  quaUty 
basis  and  has  continually  sought  ways  of  improving  its 
shirts.  The  company  has  seven  factories,  located  in 
different  New  England  towns,  each  of  which  produces 
a  different  type  or  grade  of  shirt.  With  one  exception, 
all  of  the  factories  have  from  the  beginning  been 
conducted  on  an  open-shop  basis. 

A  few  years  ago  the  salesmen  of  the  Mann  Company 
insisted  that  the  work  shirt  manufactured  under  the 
company's  brand  should  bear  the  union  label.  They 
argued  that  sales  of  this  shirt  would  be  greatly  increased 
thereby.  Though  the  management  was  opposed  to 
unionization  of  its  factories,  it  finally  submitted  to  the 
request  and  unionized  the  factory  which  makes  the 
work  shirts.  In  turn,  the  company  bought  from  the 
union,  at  1  cent  apiece,  labels  which  indicate  to  the 
trade  that  the  product  is  union-made. 

The  change  of  the  factory  from  the  open  shop  to  the 
closed  shop  meant  no  alterations  in  factory  operation. 
The  working  conditions  and  the  wages  paid  were 
already  equal  to  those  required  by  the  union.  It  was 
simply  a  matter  of  having  the  employees  join  that 
organization. 

The  company  operated  for  a  year  under  the  union 
arrangement  with  success.  Sales  of  work  shirts  bearing 
the  union  label  increased,  though  not  to  so  large  an 
extent  as  was  anticipated.  Relations  with  the  union 
and  with  the  emploj^ees  were  satisfactory.  At  the  end 
of  the  year  an  officer  of  the  union  visited  the  president 
(jf  the  firm,  explaining  that  objections  to  the  Mann  shirt 
bearing  the  union  label  had  been  raised  in  the  New  York 
market.  These  objections  came  in  part  from  union 
employers  in  the  New  York  district,  and  in  part  from 
New  York  operatives.     The  complaints  were  based  on 


22(i        PKOHLKIVIS  IN  SALES  MANAGEMENT 

the  belief  that  the  Mann  Company  was  operating 
under  an  ap;rcement  with  the  union  wliich  gave  the 
firm  an  achuntage  over  the  New  York  manufacturers. 
The  latter  asked  that  the  same  rules  be  applied  to  the 
Mann  Company  by  the  union  as  applied  to  them. 
These  rules  in  part  governed  the  method  in  which  the 
shirts  were  manufactured,  such  as  the  manner  of  sewing 
a  strengthening  piece  across  the  shoulders  and  the 
finishing  of  seams.  The  union  representative  stated 
that  unless  the  president  saw  fit  to  make  the  changes 
in  pattern  required,  the  union  would  be  compelled  to 
remove  the  right  to  sew  the  union  label  on  the  Mann 
shirts.  The  management  felt  that  the  changes  de- 
manded would  materially  decrease  the  strength  and 
wearing  qualities  of  the  shirts. 

Question 
Should    the    company    comply    with    the    union's 
demands? 


Problem  hi\ 
Quality  op'  Product 

The  Hight  &:  Sawyer  Company  was  founded  in  1854 
as  makers  of  highest-grade  organs  and  has  been  making 
pianos  since  1882.  In  1908  the  company  failed  because 
of  inefficient  factory  supervision,  lack  of  accurate  cost 
figures,  poor  system  of  distribution,  lack  of  uniformity 
in  retail  prices,  instability  of  advertising  policy, 
expensive  attempt  to  market  a  patented  device  and  lack 
of  working  capital. 

The  company  found  itself  in  a  peculiar  position  in 
1903.  The  name  was  known  all  o\er  the  world,  but 
was  associated  with  very  fine  high-priced  organs.  The 
pianos  had  been  sold  on  this  reputation  until  the  dealer 


SALES  POLICIES  227 

and  tuner  influence  had  somewhat  counteracted  it. 
Their  real  merit  was  known  to  a  very  small  group  of 
those  qualified  to  judge  musical  instruments.  It  was 
possible  to  improve  quality  at  increased  manufacturing 
costs,  but  even  at  prevailing  costs  the  company  was 
losing  money.  The  agency  of  Hight  &  Sawyer  Pianos 
was  not  sought  after.  It  was  not  profitable  to  houses 
of  the  better  class,  since  the  public  did  not  believe  the 
pianos  to  be  worth  the  price  their  cost  and  true  merit 
demanded;  and  the  retail  prices  were  above  those  of 
"commercial"  pianos.  No  mere  published  claims  of 
merit  were  of  much  value,  for  all  manufacturers  use 
them  irrespective  of  the  real  worth  of  their  products. 

The  proportion  of  labor  cost  to  total  cost  is  very  high. 
Steadiness  of  employment  and  stress  on  quality,  instead 
of  quantity  production,  are  causes  of  slight  labor  turn- 
over. The  factory  employs  about  400  men.  The 
work  is  done  mainly  at  day  wages;  before  the  labor 
market  became  disorganized,  the  rates  were  higher 
than  the  prevailing  rates. 

Questions 

1.  In  view  of  conditions  then  existing,  would  you 
build  pianos  to  sell  at  a  price,  or  would  you  continue 
to  build  them  as  fine  as  possible  and  base  your  price  on 
cost,  no  matter  how  high  that  price  might  be? 

2.  If  the  latter  course  were  adopted,  what  policies 
should  be  adopted  as  to  advertising? 


228        PRUBLMMS   IN  SALKS  MAXACIKMKNT 

Stvli:  Policy 

{(i)  111  an  article  on  the  shoe  trade,  a  j)rominent 
newspaper  in  the  shoe  manufacturing  district  made 
the  following  statement  (May,  1921): 

For  some  time  the  principal  energies  in  the  shoe  and 
leather  industries  have  been  centering  on  women's  footwear, 
to  the  practical  exclusion  of  other  classes  oi  merchandise. 
The  usual  production  of  children's  shoes  continues,  hut  there 
is  little  need  of  incentives  through  novelties  of  style  and 
finish  in  order  to  sell  such  staples.  In  women's  lines, 
dealers'  efforts  have  been  devoted  to  trying  to  get  women  to 
buy  the  new  shoes  at  high  prices,  and  so  they  have  discounted 
the  bargains  and  clearances  of  a  year  ago,  by  submitting 
such  attractive  designs  that  the  1920  goods  seemed  ancient 
and  undesirable  except  when  the  wearer  was  indoors  with 
her  feet  unfler  the  table.  So  the  trade  has  Ijeen  very  busy 
and  much  interested  in  getting  out  new  styles  and  attractive 
designs  and  marketing  them  as  fast  as  possible  to  the 
waiting  women. 

Now  the  edict  has  gone  out,  "Put  more  style  in  men's 
shoes,"  and  before  long  the  modest  men  may  find  some 
striking  examples  of  the  cordwainer's  art  offered  for  their 
delectation,  as  the  proper  articles  to  have  and  to  wear.  The 
first  lines  to  be  enlarged  will  be  the  white  buck  shoes  for 
summer,  and  these  will  be  decorated  and  trimmed  much  as 
the  novelties  for  the  other  sex.  Brown  trimmings  and 
pleasing  l)rogues  will  be  kept  prominent. 

Now  that  the  trade,  and  more  particularly  the  retailers 
of  men's  shoes,  are  thinking  of  giving  greater  attention  to 
style  in  men's  lines,  a  belief  is  growing  which  may  bring  the 
end  to  so  much  of  the  '  'brogue"  in  the  business.  The  brogue 
is  necessarily  a  heavy  type  of  shoe.  Its  appearance  suggests 
that,  even  if  the  actual  weight  is  not  above  the  weight  of 
any  of  the  majority  of  patterns.  It  also  is  .so  strongly  made 
that  it  wears  slowly  and  retailers  see  that  they  do  not  sell 
so  many  pairs  of  shoes  to  a  customer  as  they  did  before  the 
brogue  design  was  wished  on  them.  So  they  are  talking 
of  lighter  weight  patterns,  particularly  for  summer  wear, 
and  such  an  arrangement  of  men's  styles  as  to  provide 
marked  distinction  between  the  boots  and  shoes  of  each 
season,  with  a  proper  a.ssortment  of  distinctive  footwear  for 
special  occasions.  That  something  is  going  to  happen  in 
men's  footwear  during  the  next  few  months  is  probable, 
and  a  better  assortment  will  be  offered  by  another  season 
than  has  been  the  case  for  some  time. 


SALES  POLICIES  229 

Question 
I.  What  should  be  the  policy  with  regard  to  style 
of  the  Mansur  Shoe  Company,  having  a  daily  capacity 
of  12,000  pairs  of  medium-grade  men's  shoes?  The 
company  has  been  accustomed  to  sell  through  whole- 
salers. 


(5)  The  Pulsifer  &  Pow^s  Company,  manufacturers 
of  men's  medium-priced  clothing,  has  been  in  busi- 
ness for  75  years.  During  the  past  10  years,  in 
spite  of  considerable  expansion  in  production  facilities, 
they  have  always  been  oversold;  that  is,  they  have 
never  been  able  to  fill  orders  for  customers  up  to  100 
per  cent. 

Some  years  ago  the  company,  impressed  with  the 
idea  that  it  would  be  desirable  to  eliminate  as  far  as 
possible  the  seasonal  fluctuation  reflected  in  the  fact 
that  traveling  salesmen  were  on  the  road  twice  a  year 
for  a  period  of  eight  to  ten  weeks,  considered  two  plans. 
The  first  was  the  establishment  of  branch  offices  in 
several  cities  from  which  salesmen  should  take  four, 
instead  of  two,  trips  a  year.  This  was  abandoned  as 
involving  excessive  risk.  The  other  plan  was  to 
emphasize  production  of  three  or  four  conservative 
patterns  or  styles  in  popular  fabrics,  such  as  blue  serge. 
These  suits  were  to  be  made  in  large  quantities  and  sold 
during  the  season  when  ordinarily  little  buying  and 
little  manufacturing  could  be  done.  This  plan  was 
put  into  practice  four  years  ago;  and,  at  the  present 
time,  one-third  of  the  total  production  consists  of  four 


230        I'KoliLKMS  IN  SALES  MANAGEMENT 

iiiiinl)(M-s.  The  prol^lciii  is  now  whether  to  hinit  tlie 
lumiher  of  sales  on  tliese  nunil)ers  or  to  allow  them  to 
climh  u|)  to  (■>()%,  65Vf  <»'■  7")'\' .  The  arguments  in 
favor  are  that  they  would  l)rinj2;  about  some  lowering 
in  the  cost  of  manufacture  and  ordinarily  somewhat 
greater  coiitiimity  of  production.  The  arguments 
against  ar(>  that  these  particular  patterns,  which  are 
classed  as  sta))les,  may  in  si)ecific  years  be  in  little 
demand  and  thai  years  have  been  known  in  which 
fancies  were  sold   almost  exclusively. 

(Jucslions 

1.  \\ Ould  it  be  i)ossible  for  a  concern  manufacturing 
women's  suits  and  cloaks,  which  are  widely  advertised, 
to  adopt  a  similar  \)\i\n  for  stabilizing  production? 

2.  If  so,  how  .should  the  styles  be  selected? 


l*KOHLi:.M    hZS 

Policy  as  to  Complete  Line 

The  Moulden  Company  manufactures  a  complete 
line  of  filing  and  indexing  devices  for  business  concerns 
and  other  institutions  requiring  such  equipment.  The 
company  has  established  its  own  stores  in  several 
important  cities  and  has  made  arrangements  in  others 
for  representation  by  prominent  office  equipment 
dealers.  The  company  specializes  in  filing  equipment; 
and,  unlike  its  competitor,  the  Dinsmore  Company, 
does  not  handle  desks,  chairs,  or  other  office  equipment. 

The  problem  has  arisen  as  to  whether,  particularly 
in  their  own  stores  and  later  for  general  distribution, 
they  should  add  a  line  of  desks,  chairs  and  other  office 
equipment  purchased  from  other  manufacturers  to 
secure  advantage  of  a  complete  line.     The  Moulden 


* 


SALES  POLICIES  231 

Company  knows  that  it  has  been  more  successful  in 
selHng  filing  equipment  than  competitors  who  handle 
full  lines  of  office  furniture,  but  it  is  not  known  whether 
this  success  is  due  to  specialization,  which  would  be 
lost  if  they  should  add  a  new  line  of  furniture,  or  simply 
to  better  merchandising  methods. 

Question 
What  policy  should  be  adopted? 


Problem  124 
Full-Line  Policy 

The  Federal  Trade  Commission,  in  its  inquiry  into 
the  farm  machinery  trade,  says  that  there  is  a  notice- 
able development  toward  full-line  production  among 
manufacturers  of  farm  machiner}-.  Tractor  companies 
engaged  in  the  manufacture  of  plows  to  be  used  with 
the  tractors  are  consolidated  with  plants  manufacturing 
plows.  Examples  of  such  consolidations  are  the 
purchase  of  the  Jamesville  Machine  Company  by  the 
General  Motors  Company,  the  Moline  Plow  Company 
by  Willys-Overland  Company,  Arling  &  Orendorff  and 
the  Chattanooga  Plow  Company  by  the  International 
Harvester  Company.  The  International  Harvester  is 
thereby  made  a  full-line  house,  having  manufactured 
previously  practically  every  other  type  of  farm  equip- 
ment. The  Federal  Trade  Commission  investigation 
does  not  demonstrate  any  clear  advantage  on  the  basis 
of  selling  expense,  for  full-line  concerns. 

In  other  lines,  as  well,  there  is  frequently  the  problem 
of  adding  new  lines.  A  concel-n  manufacturing  tools 
and  certain  types  of  equipment  to  be  used  by  textile 
mills  is  tempted  to  add  a  line  of  mill  supplies,  partly  of 


232        IM{()BLEMS  IN  SALES  MANAGEMENT 

its  own  nuuiufacturo  and  i)artly  purchased.  Assuming 
that  sales  are  sufficiently  large  to  fully  occupy  present 
sales  and  productive  capacity  with  a  limited  line: 

Qiieslions 

1.  What  advantages  are  secured  by  increasing  the 
line? 

2.  What  sales  advantages  may  be  secured  by  the 
Cornell  Motor  Car  Company  through  consolidation 
with  a  tractor  concern? 


Problem  125 
Addition  of  New  Line 

(a)  A  manufacturing  jeweler,  located  in  New  York, 
has  developed  a  considerable  trade  in  medium-  and  low- 
priced  jewelry,  which  he  has  distributed  direct  to  the 
retail  trade.  The  company  has  never  done  any 
advertising,  except  through  trade  journals.  Conse- 
quently, it  is  unknown  except  to  retailers  and  whole- 
salers in  jewelry  circles.  It  is  proposed  that  the  com- 
pany add  to  its  medium-  and  low-priced  line  a. small  line 
of  pearl  necklaces  of  high  quality,  selling  at  from  S50 
to  S300.  These  pearl  necklaces  are  to  be  advertised 
extensively  and  emphasis  is  to  be  placed  upon  quality. 
The  media  used  are  to  be  those  appealing  to  high-class 
buyers.  The  sales  manager,  who  advocates  the  addi- 
tion of  this  line,  asserts  that  advertisement  of  these 
high-grade  pearls  will  give  their  line  of  jewelry  a  prestige 
which  it  does  not  now  possess;  furthermore,  that 
whether  the  sale  of  pearl  necklaces  is  in  itself  profitable 
or  not,  the  advantages  will  be  reflected  in  greater  sales 
of  the  other  lines  of  the  company. 


SALES  POLICIES  233 

Question 
As  a  member  of  the  board  of  directors,  would  you 
approve  the  addition  of  this  Une  and  the  advertising 
appropriation  necessary? 


(b)  By  means  of  advertising  and  travehng  salesmen, 
a  company  which  publishes  six  popular  magazines,  one 
appealing  to  the  motorist,  another  a  ladies'  journal, 
the  others  of  the  popular  fiction  type,  sells  its  product 
to  wholesalers  in  the  larger  communities,  to  retailers 
direct  in  the  smaller.  It  is  suggested  that  the  company 
undertake  the  distribution  of  package  confectionery, 
particularly  half-pound  and  one-pound  boxes  of  choc- 
olates and  bonbons,  and  fruit  tablets  and  mints  in 
5-cent  packages. 

Question 
What  are  the  arguments  for  and  against  the  addition 
of  this  line?     • 


Problem  126 
Adding  New  Lines 

Should  a  shoe  manufacturer,  who  has  advertised  a 
scientifically  fitted  and  constructed  shoe  catering  par- 
ticularly to  infants'  and  children's  trade,  add  a  line  of 
hosiery  which  is  to  be  advertised  and  sold  much  as  the 
shoes  have  been  advertised  and  sold? 

It  is  very  unusual  for  a  shoe  company  to  undertake 
the  sale  of  hosiery.  In  this  particular  case,  it  has 
been  known  by  the  company  for  years  that  the  purpose 
of  the  scientifically  designed  shoe  can  be  in  a  large 
measure  defeated  by  the  use  of  an  ill-fitting  stocking 
in  connection  with  it. 


■iivl        I'ROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  If  the  line  of  liosiery  is  added,  wluit  should  be 
the  attitude  of  the  sales  manager  of  the  company 
toward  styh^s  and  materials? 

2.  How  sliould  it  go  a))()ut  deterinininji  what  styles, 
materials  and  colors  to  be  produced? 


Problem  127 
Complete  Line  ix  Manufacturers'  Retail  Stores 

The  IVIarvelle  Shoe  Company  manufactures  a  line  of 
women's  and  men's  dress-shoes.  It  manufactures  only 
welt  shoes,  none  with  turned  soles.  The  company 
distributes  a  considerable  portion  of  its  j)roduct  through 
its  own  stores.  On  the  basis  of  its  own  manufactures, 
the  retail  stores  cannot  offer  a  full  assortment  of  shoes 
to  meet  the  demands  of  all  classes  of  buyers.  Hence  it 
has  been  necessarj'  for  them  to  limit  the  establishment 
of  their  stores  to  large  cities,  where  there  is  a  sufficiently 
large  demand  for  their  shoes.  The  general  policy  is  to 
put  a  store  in  no  city  of  less  than  150,000  people, 
although  stores  have  in  a  few  cases  been  located  in 
western  territor}^  in  smaller  cities  which  are  good 
trading  centers.  A  problem  arises  in  connection  with 
these  stores. 

Questio)is 

1.  Would  it  be  possible  for  the  company  to  supple- 
ment its  own  brand  of  shoes  with  others,  in  order  to 
afford  styles  to  meet  a  wider  demand? 

2.  At  the  present  time,  the  company  buys  some 
turned-sole  shoes  with  its  own  trade-mark  from  other 
manufacturers.  Would  it  be  advisable  for  the  com- 
pany to  go  farther  and  put  in  a  complete  line? 


SALES  POLICIES  235 

Problem  128 
Simplification* 

During  the  war,  the  necessity  of  conserving  raw 
materials  and  labor  found  expression  in  the  active 
encouragement  given  to  simplification  of  manufactures 
as  a  means  of  effecting  scientific  and  industrial  econ- 
omies. The  Conservation  Division  of  the  War  Indus- 
tries Board  formulated  a  large  number  of  programs  of 
conservation  for  specific  industries.  In  the  main, 
these  consisted  of  reduction  in  the  number  of  styles 
and  varieties,  sizes,  colors  and  finishes  of  products, 
elimination  of  styles  and  varieties  involving  uneconomi- 
cal use  of  material,  elimination  of  unnecessary  features 
or  accessories  and  standardization  of  materials  and 
parts  to  secure  greatest  economy.  There  were  many 
conspicuous  instances  in  the  reduction  of  styles. 

On  the  basis  of  agreement  with  the  business  men  in 
the  industry,  the  number  of  colors  of  men's  hats  was 
reduced  to  9.  It  is  stated  that  several  manufacturers 
previously  had  lines  of  hats  of  approximately  100  colors. 
Rubber  footwear  manufacturers  agreed  to  the  elimina- 
tion of  some  5,500  styles,  under  a  program  of  economy 
in  packing  and  shipping.  Among  agricultural  imple- 
ment manufacturers,  the  sizes  and  types  of  steel  plows 
were  reduced  from  312  to  76;  disk  harrows  from  539 
to  38;  buggy-springs  from  over  120  to  1.  In  the 
pocket-knife  industry  the  number  of  basic  patterns 
was  reduced  from  300  to  45,  with  the  variations  and 
catalog  numbers  reduced  from  6,000  to  a  maximum 
of  100  for  each  manufacturer.  About  80%,  or  4,252 
items,  were  eliminated  by  the  standardization  program 
in  the  stamped  metal  industry,  manufacturing  enam- 
eled ware,  tin  ware,  and  galvanized  ware. 

From  the  view-point  of  the  plant  manager,  the 
advantage  of  such  simplification  is  very  clear  in  plan- 
ning of  production;  in  production  itself  and  its  control, 
distinct   advantages   are    secured    through   a   smaller 

*Melviu  T.  Copeland,  in  Bullelin  of  the  Taylor  Society,  April,  1921. 
Also  series  of  articles  upon  "Simplification,"  in  Factory,  April,  May, 
June,  1921. 


28()        PROBLEMS  IN  SALES  MANAGEMENT 

imniber  of  products  in  tlie  line.  The  gains  in  quality 
of  product,  througli  decrease  in  idle  machine  time  and 
variety  of  tools,  jigs,  and  fixtures,  are  easily  seen;  there 
is  an  increase  in  quantity,  while  cost  is  decreased 
through  smaller  inventories  and  larger  runs  of  product 
without  change  of  machinery.  After  the  war,  sales 
managers  in  the  industries  affected  by  conservation 
programs  were  generally  confronted  with  the  question 
of  future  policy  as  to  the  standardized  production 
carried  on  during  the  war.  ^ 

(a)  Before  the  war,  it  was  the  custom  of  the  Deering 
Company  to  offer  customers  20  models  of  sack  suit. 
These  models  were  offered  in  the  various  suitings 
purchased  each  year  by  the  piece-goods  buyers.  In 
most  seasons,  the  number  of  different  suitings  was  in 
excess  of  1,000.  At  the  same  time,  each  customer  was 
offered  the  choice  of  lining  construction.  The  number 
of  his  choices  was,  therefore,  ver}^  large.  In  addition 
to  the  20  regular  models,  the  company  offered  to  make 
special  models  for  customers  and  actually  made  15 
customers'  specials,  but  on  these  there  was  no  model 
of  which  the  sales  amounted  to  more  than  .5%  of  total 
sales.  As  a  matter  of  fact,  the  great  bulk — practically 
90%  of  the  sales  of  the  company — is  concentrated  on  6 
or  7  models.  Toward  the  close  of  the  war,  the  com- 
pany seriously  considered  eliminating  all  hut  the  10 
best  selling  of  its  regular  models. 

Questio7i 
What  should  be  the  attitud(^  of  the  sales  manager 
toward  this  simplification? 


ib)  The  Bates  Piano  Company,  producing  about  800 
pianos  a  year,  supjilies  these  in  seven  styles  and  sizes 
of  cases.  It  is  estimated  that,  if  standard  sizes  could 
be  introduced,  a  10%  saving  could  be  made. 


SALES  POLICIES  237 

Questioji 
Would  the  10*/ 0  saving,  if  divided  between  manufac- 
turer and  dealer,  be  sufficient  reason  for  reducing  the 
number  of  sizes  of  cases  to  two? 


(c)  A  company  manufacturing  pipes,  valves  and 
pipe  fittings  has  a  list  of  items  amounting  to  some 
23,000.  Of  these,  the  bulk  of  trade  is  conducted  in 
less  than  1,000. 

Question 

What  considerations  should  determine  the  company's 
policy  with  respect  to  elimination  of  styles  and  products? 


Problem  129 

Elimination  of  Sizes  and  Styles 

The  Stone  Company  turns  out  a  variety  of  products, 
the  chief  one  of  which  is  cotton  blankets.  The  present 
facilities  enable  it  to  turn  our  approximately  five 
million  pairs  a  year,  which  comprise  about  80%  of  the 
value  of  the  total  output  of  the  mill.  The  blankets 
are  made  in  four  grades,  which  we  will  call  A,  B,  C, 
and  D  and  come  in  various  sizes  and  patterns.  The 
following  list  will  show  under  each  grade  the  sizes, 
weights,  number  of  patterns,  and  the  1920  orders  for 
each  size. 


GRADE 

A 

Plain 

60  Patterns 

1920  Orders 

60x76 

3 

lbs. 

per  pai'- 

2380  cases 

64x76 

3M 

li 

a 

5052      " 

60x80 

3H 

i( 

« 

382     " 

66x80 

33^ 

u 

a 

5792     " 

66x84 

3^ 

(i 

« 

390     " 

72x80 

3% 

u 

« 

1896     " 

72x84 

4 

u 

u 

1784      « 

2as 


l'lU)JiJ.KMS  IN  SALKS  MANA(  IKAIKNT 


Plaid 

, 

52  Patterns 

1920  Orders 

66x80 

8  4/10  lbs.  per  pair 

3862  cases 

66x80 

m 

u         u         u 

15648      " 

72x84 

\\A 

U             ((              « 

GRADE  B 

3592      " 

Plain 

58  Patterns 

1920  Orders 

45x72 

\y, 

lbs.  per  pail- 

1492  cases 

50x72 

m 

u         a         u 

2400      " 

54x74 

2 

a         ti         u 

4412      " 

66x76 

2^ 

a         u         u 

5902      " 

64x76 

ly, 

U           11            u 

8818      " 

64x80 

2% 

a         u          H 

3464      " 

66x80 

2  4/5      "      "       " 

3854      " 

72x80 

3 

u        u         a 

4560     " 

72x84 

3H 

li            11             u 

1066      " 

Plaid 

, 

32  Patterns 

1920  Orders 

60x76 

2^ 

lbs.  per  pair 

3922  cases 

64x76 

2K 

tt         a         ti 

9254      " 

72x80 

m 

«         a         « 

GRADE  C 

2346      " 

16  Patterns 

1920  Orders 

66x84 

2M 

lbs.  per  single 

982  cases 

72x84 

3 

GRADE  D 

552     " 

2  Patterns 

1920  Orders 

64x76 

4  lbs.  per  pair 

3032  cases 

The  blankets  are  all  made  of  pure  cotton,  but  differ 
considerably  in  quality,  and  in  each  grade  there  is  a 
difference  between  the  plains  and  plaids.  This  is  due 
to  the  fact  that  a  heavier  filling  is  used  in  the  latter 
in  order  to  bring  out  the  colors  better.  P^or  this  reason 
and  since  it  is  .'Somewhat  more  expensive  to  make  them, 
the  plaids  bring  a  higher  price  than  the  plains.  The 
Grade  A  blankets  are  not  only  considerably  heavier  than 
the  Grade  B  product,  Init  they  are  much  better  made, 
have  a  better  finish  and  therefore  connnand  a  good  deal 
higher  price.     Grade  C  is  a  very  heavy  blanket  made 


SALES  POLICIES  239 

on  the  same  machinery  and  going  through  the  same 
processes  as  Grade  A,  but  owing  to  its  weight  it  is  made 
only  in  singles.  Grade  D,  though  very  similar  to  Grade 
A,  has  a  different  filling  and  its  general  quality  is  lower. 
It  is,  therefore,  between  Grades  A  and  B  in  price. 

The  plain  blankets  are  made  in  white,  grey  or  tan, 
with  borders  of  varied  stripes  and  colors,  but  with  pink 
and  blue  predominating.  The  plaids  come  in  several 
colors  and  different  patterns,  so  that  a  combination 
of  the  two  makes  a  considerable  variety. 

As  shown  by  the  1920  orders,  Grade  B  forms  a 
majority  of  the  output.  In  Grades  A  and  D,  there  are 
only  50  pairs,  and  in  Grade  C  50  singles,  to  the  case. 
In  Grade  B  the  two  smallest  sizes  are  packed  100 
pairs  and  the  remainder  80  pairs  to  the  case.  When 
these  factors  are  considered,  the  percentage  of  output 
of  each  grade  to  the  total  as  shown  here  would  be 
approximately  as  follows: 

Grade  A  Grade  B  Grade  C   1% 

Plain  15%  Plain  41%  Grade  D  2% 

Plaid  19%  Plain  21% 

The  number  of  cases  as  shown  makes  up  consider- 
ably less  than  five  million  pairs,  but  the  export  orders 
and  assorted  cases  for  the  domestic  trade  are  not 
included.  The  latter  would  not  in  any  way  change 
the  proportion  of  each  size  to  the  total,  while  the  gen- 
eral problem  is  not  affected  by  the  export  business  of 
the  company. 

Grade  A  blankets  are  sold  under  a  registered  trade- 
mark bearing  the  name  of  the  mill  and  the  trade-name 
on  a  label,  which  is  stitched  on  each  pair  of  blankets. 
The  ticket  on  each  pair  also  bears  the  trade-name. 
Grade  B  plaids  and  Grade  C  have  more  recently  been 
trade-marked,  and  an  application  for  registration  has 
been  made.  These  are  both  new  to  the  lin-e  this  year, 
which  explains  why  the  trade  name-has  not  yet  been 
registered.  The  tickets  on  these  blankets  are  similar 
to  the  others,  retaining  the  trade-name  and  the  name  of 
the  mill.     Grade  Bplains  and  Grade  D  are  not  trade- 


240        PHOHLEMS  IN  SALES  MANAGEMENT 

marked.  In  tho  fornuM-,  the  blankets  may  be  given 
either  a  mill  ticket  or  the  ticket  of  the  job})er  or  re- 
tailer with  or  without  the  mill's  name.  In  some  in- 
stances the  ticket  may  have  read  "Manufactured 
es])ecially  for "  with  the  name  of  the  jobber. 

The  highest  ([uality,  (irade  A,  forming  32%  of  the 
output,  are  widely  a(h'ertised.  The  next  grade,  B, 
meets  with  very  keen  competition.  (Irade  D  is  the 
quality  in  which  there  is  the  greatest  competition;  this 
grade  conu^s  between  A  and  B  in  quality.  Grade  C 
in  single  l)lankets  is  the  same  ([uality  as  A.  The  sizes 
of  blankets  have  been  governed  in  a  general  way  by 
the  sizes  of  beds  used.  The  three  general  sizes — 
single,  three-ciuarters,  and  double — have  in  the  past 
been  subjected  to  many  variations,  but  90%  of  factory- 
made  beds  are  in  the  three  standard  sizes.  Although 
it  might  appear  that  there  should  be  only  three  sizes 
of  blankets,  the  list  given  shows  that  there  are  13  sizes 
put  out  by  the  mill,  while  still  other  sizes  are  put  out 
by  other  companies. 

The  large  number  of  sizes  is  due  partly  to  the 
difference  in  opinions  of  blanket  manufacturers  as  to 
the  proper  size  of  blankets  for  one  of  the  standard- 
size  beds  and  partly  to  the  competition  of  manufac- 
turers, which  led  some  to  cut  sizes  in  order  to  be  able 
to  make  lower  quotations.  The  result  was  that  a  large 
number  of  sizes  was  adopted  by  all  manufacturers  as  a 
concession  to  competition. 

Patterns  of  blankets  change  more  rapidly  than  do 
sizes.  The  plain  blankets  are  made  in  three  colors — 
white,  grey  and  tan — for  which  the  demand  varies  in 
different  sections  of  the  country.  The  conventional 
colors  for  borders  are  pink  and  blue,  although  several 
others  are  used,  stripes  and  borders  varying  consider- 
ably in  width  and  number  each  year.  There  are  some 
that  last  as  long  as  three  years,  but  it  can  safely  be 
said  that  in  any  season  few,  if  any,  of  the  designs 
sold  for  years  earlier  are  changed.  In  the  plaid  blan- 
kets there  are  practically  no  conventions  upon  which 
the  patterns  are   based.     Colors   change   each   year. 


SALES  POLICIES  241 

Question 
Is  it  possible  for  the  Stone  Company  to  reduce  the 
number  of  sizes  and  patterns  and  still  be  able  bo  sell 
their  output? 


Problem  130 
Service  Policy 

The  Welch  Motors  Company,  manufacturing  a  car 
in  the  $1,500  to  $2,500  class,  makes  the  following 
statement  concerning  its  service  policy  as  applied  to 
distributors  and  dealers: 

OBLIGATIONS  OF  THE  FACTORY 

(1)  To  produce  a  motor  car  as  perfect  in  design,  work- 
manship and  material  as  it  is  possible  to  build  for  the 
purpose  for  which  it  is  intended. 

(2)  To  maintain  at  all  times,  subject  to  the  call  of  its 
distributors,  a  complete  stock  of  service  repair  parts. 

(3)  To  fill  all  parts  orders  carefully  and  make  shipments 
promptly. 

(4)  To  insist  on  Welch  distributors  keeping  a  careful 
record  of  their  parts  stock  and  reporting  amount  of  such 
stock  on  hand  monthly. 

(5)  To  insist  that  each  Welch  distributor  keep  in  his 
employ  at  all  times  competent  service  men. 

(6)  To  furnish  proper  instruction  to  Welch  distributors 
as  to  the  proper  care  and  maintenance  of  cars. 

In  assuming  the  obligation  of  a  manufacturer,  the  Welch 
Motors  Company  has  provided  against  any  contingency 
that  might  arise  by  maintaining  a  stock  of  repair  parts  that 
represent  an  investment  in  excess  of  a  million  dollars.  Years 
of  experience  have  made  this  factory  realize  the  necessity 
for  having  these  parts  available  at  all  times  during  the 
normal  useful  life  of  a  car,  and  provisions  have  been  made 
in  the  way  of  mechanical  equipment,  machinerj'',  tools,  dies, 
jigs,  etc.,  all  of  which  are  retained  in  stock  for  a  period  in 
excess  of  any  reasonable  demand  for  service  parts. 


242      1'|{()Hi.i;ms  in  salks  management 

A  scrvitx'  a(l\anl;i^(>  wliicli  caiUKjt  Ix'  emphasized  too 
strongly  is  tliat  Welch  cars  are  built  i)ractically  complete 
in  our  own  factory.  This  t)l)viously  makes  it  possible  to 
give  better  service  than  if  we  were  to  purchase  units  from 
other  manufacturers  for  assembly  and  be  governed  in  our 
ability  to  give  service  by  our  ability  to  obtain  service  from 
a  large  numl)er  of  outside  parts  nuikers. 

In  the  i)urchase  of  such  equipment  as  is  necessary  to 
obtain  through  outside  sources — such  as  an  ignition  appara- 
tus, carburetors,  steering  devices,  starting  and  lighting 
equipment,  batteries,  etc. — only  concerns  of  national  repute, 
whose  finances  and  standing  in  the  industry  indicate  per- 
manency, have  been  considered.  The  service  principles 
of  such  concerns  are  in  accord  with  the  Welch  service  policy. 

Realizing  that  service  is  a  most  important  element  in  the 
building  up  of  a  successful  motor  car  business,  the  Welch 
Motors  Company  expects  its  distributors  and  dealers  to 
adhere  strictly  to  this  service  pohcy,  and  the  value  of  the 
distributor  or  dealer  to  the  Welch  Motors  Company  will 
depend  to  a  very  large  extent  upon  his  fulfilling  these 
service  obligations. 

OBLIGATIONS  OF  THE  DISTRIBUTOR 

(1)  To  maintain  facilities  for  rendering  prompt  and 
efficient  service  at  all  times. 

(2)  To  maintain  at  all  times  a  sufficient  stock  of  parts  to 
fill  promptly  at  least  90%  of  all  parts  orders  received  from 
his  territor}^  from  his  stock. 

(3)  To  convey  to  the  dealer  or  purchaser  information 
and  instruction  as  furnished  by  the  manufacturer  relative 
to  the  maintenance  and  service  of  Welch  cars. 

(4)  To  have  in  his  employ  at  all  times  a  sufficient  number 
of  expert  mechanics,  not  only  properly  to  instruct  his  dealers 
in  the  matter  of  service  and  service  adjustment,  but  to 
assist  them  in  rendering  necessary  service. 

(5)  To  keep  in  touch  with  all  Welch  cars  sold  in  his 
territory,  either  directly  or  through  his  dealers,  to  insure 
their  satisfactory  performance,  and  to  see  that  proper  service 
is  rendered  on  each  and  every  car  in  his  territory. 

(6)  To  make  a  monthly  report  to  the  manufacturer  of 
his  parts  stock,  together  with  a  statement  showing  the 
number  of  parts  orders  received  and  the  percentage  filled 
from  his  stock. 

(7)  To  report  all  unusual  service  difficulties  to  the  man- 
ufacturer. 


SALES  POLICIES  243 

(8)  To  put  into  effect  a  standardized  service  policy 
which,  by  means  of  periodical  inspection  or  otherwise  as 
conditions  throughout  his  territory  may  warrant,  will  main- 
tain the  good  name  of  the  product  and  insure  satisfactory 
territory  development. 

(9)  In  cases  where  the  distributor  sells  cars  at  retail, 
he  shall  assume  the  service  obligation  of  the  dealer  in 
addition  to  those  of  the  distributor. 

The  distributor  is  a  most  important  factor  in  the  success 
of  the  Welch  jNIotors  Company.  He  is  the  medium  through 
which  our  product  reaches  the  hands  of  the  dealer.  The 
distributor,  therefore,  is  the  medium  upon  whom  we  must 
depend  for  a  complete  and  thorough  service  organization 
throughout  his  territory. 

It  is  our  intention  to  build  Welch  cars  just  as  well  as  we 
can  build  them  and  to  improve  them  from  time  to  time. 
There  are  times,  however,  when  we  shall  undoubtedly 
experience  troubles  in  our  product  through  faulty  material 
or  inspection,  which  may  necessitate  a  certain  amount  of 
expert  work  in  connection  with  cars  already  in  the  territory. 
When  this  condition  does  arise,  we  shall  expect  the  dis- 
tributor to  be  prepared,  through  an  efficient  service  depart- 
ment, to  take  care  of  this  trouble  without  assistance  from 
the  factory  except  in  cases  where  a  chronic  condition  arises 
on  a  large  numl^er  of  cars  of  a  current  model.  In  this  case, 
the  distributor  will  notify  the  factory. 

The  distributor  must  consider  that  this  service  is  one  of 
his  functions  as  a  distriliutor,  and  we  do  not  expect  the 
distributor  to  pass  this  expense  on  to  the  dealer.  This  is 
one  of  the  very  important  considerations  in  the  granting  of 
the  Welch  franchise  to  Welch  distributors. 

It  is  the  distributor's  duty,  and  we  shall  insist  that  each 
distributor  fulfil  his  obligation  in  the  matter  of  parts  stock, 
and  maintain  in  his  employ  mechanics  and  service  men  with 
proper  ability  to  give  assistance  in  all  service  matters  to 
his  dealers.  This  service,  generally  speaking,  shall  be  free 
service,  and  he  shall  have  his  service  men  almost  constantly 
on  the  road  to  se(^  that  his  dealers  are  properly  posted  and 
that  their  troubles  are  promptly  cared  for. 

The  distributor  who  does  not  carry  his  \)avt  of  the  man- 
ufacturing burden  in  the  manner  outlined  herein  fails  in 
one  of  the  most  important  duties  of  the  distributor. 

OBLIGATIONS  OF  THE  DEALER 

(1)  To  maintain  proper  facilities  for  rendering  prompt 
and  efficient  service  at  all  times. 

(2)  To  maintain  an  adequate  stock  of  parts  to  take  care 
of  the  immediate  demands  of  his  territory,  which  stock  of 


244        Pl{()HLi:.MS  IX  SALES  MANAGEMENT 

parts  shall  he  rcplciiislicd  as  ncodcd  out  of  tlio  stock  carried 
by  the  dislrihiitoi'. 

(3)  To  maintain  a  wcU-opcralcd  shop,  havinjz;  conipctont 
nu'chanics  and  ad('(iuat('  ('(luipnicnt  foi-  all  service  i-e(piire- 
nients. 

(4)  To  inspect  t  hoi()ii}iiil\'  and  adjust  all  cars  before 
delivery,  and  at  time  of  dcliver.N'  properly  instruct  the 
purchaser  with  tctcniicc  to  the  care,  opei-ation  and  main- 
tenance. 

(5)  It  is  very  important  that  the  i)urchaser  be  f^iven  a 
most  thoroufih  insti'uction  in  the  matter  of  lul)rication  as 
outlined  in  the  \\'(>lch  Insti-uction  liook. 

(6)  It  is  not  the  intention  that  the  dealer  furnish  service 
without  c(jst  to  the  owner,  excejit  when  in  his  judgment  the 
installation  of  defective  parts,  as  covered  by  the  manufac- 
turer's warranty,  shall  be  handled  gratis. 

(7)  It  is  the  dut}^  of  the  dealer  to  keep  in  constant  touch 
with  the  i)erformance  and  condition  of  all  Welch  cars  sold 
by  him,  this  by  means  of  periodical  inspection  or  some  other 
method  that  will  insure  the  cars'  continued  efficiency  and 
satisfactory  performance.  This  is  absolutely  necessary  to 
maintain  the  good  name  of  the  Welch  product  and  reflect 
credit  upon  the  entire  organization. 

It  is  expected  that  the  dealer,  realizing  that  proper 
service  is  necessary  to  the  future  development  of  his  business, 
will  cooperate  with  the  service  policies  as  defined  by  the 
manufacturer  and  distributor,  with  a  view  of  maintaining 
Welch  cars  in  constant  operation  at  the  least  possible 
expense  to  the  owner.  Through  courteous  attention  and  a 
friendly  attitude  on  the  part  of  the  dealer's  entire  organiza- 
tion, the  owner  should  be  made  to  realize  that  Welch  cars 
have  a  home — that  they  come  from  somewhere  and  that 
someone  has  a  real  interest  in  them.  This  is  a  part  of 
Welch  service. 

OBLIGATIONS  OF  THE  OWNER 

(1)  The  value  of  Welch  service  to  the  owner  and  the 
ability  of  Welch  distributors  and  dealers  to  give  efficient 
service  depend  almost  entirely  upon  the  cooperation  of  the 
owner  and  the  driver  with  the  dealer. 

(2)  Instruction,  service  and  repairs  should  be  secured 
from  the  Welch  dealer  organization  wherever  this  is  possible, 
since  Welch  dealers  are  familiar  with  Welch  passenger-car 
construction  in  every  detail  and  are  better  equipped  to 
handle  this. 


SALES  POLICIES  245 

The  Chicago  distributor  of  this  company  has  had  a 
great  deal  of  difficulty  in  rendering  the  type  of  service 
desired  in  order  to  increase  the  sale  of  cars  in  his 
vicinity.  Consequentl}^  he  has  introduced  a  new  plan 
based  partly  upon  the  experience  of  two  other  auto- 
mobile concerns.  This  consisted  of  installing  a 
system  whereby  purchasers  of  cars  could,  for  the  sum 
of  $5,  have  the  car  completely  and  carefully  inspected 
at  the  end  of  each  1,000  miles  of  driving;  at  this  time, 
a  full  statement  would  be  made  as  to  any  adjustments 
necessary  that  entailed  more  than  a  small  amount  of 
time,  so  that  in  effect  the  car  owner  at  the  end  of  each 
1,000  miles  of  driving  might  have  a  complete  statement 
of  the  condition  of  his  purchase.  It  was  expected 
that  a  considerable  saving  would  be  effected  for  the 
owner,  through  early  detection  of  lack  of  adjustment 
which  later  would  necessitate  repair  or  replacement 
of  parts.  Fm"thermore,  the  possibility  of  making  the 
slight  adjustments  necessary  for  the  smooth  running 
of  the  car  would  tend  to  increase  friendliness  of  pur- 
chasers toward  the  company  and  its  product. 

The  second  part  of  the  service  plan  was  to  have  a 
standard  labor  price  for  each  of  the  more  common 
repair  operations;  in  fact,  for  all  operations  which  were 
not  of  a  highly  unusual  nature.  With  the  standard 
list  of  cost  for  repairs,  it  would  be  possible  to  tell  each 
owner  desiring  service  the  precise  cost  of  the  repairs  or 
adjustments  necessary,  so  that  there  would  be  no 
misunderstanding  and  no  tendency  for  mechanics  to 
use  more  time  than  necessary  for  the  performance  of 
particular  tasks.  The  plan  seems  to  have  worked  out 
well  for  the  Chicago  distributor. 

The  sales  and  service  managers  of  the  manufacturing 
company  in  Detroit  have  observed  very  carefully  the 
operation  of  the  plan  in  Chicago  and  are  prepared  to 
recommend  it  to  all  distributors. 

Question 
Should  the  company  make  adoption  of  this  plan  a 
condition  upon  which  agencies  are  to  be  continued? 


24(1        PKOBLKMS  IN  SALES  MANAGEMENT 

Pkohlk.m   LSI 
Sam;s  I'oi.icv      ^L\^^  rA(  TiKKHs'   lii(\M)s 

I'lic  National  Association  ot  ( 'annors,  ('()in[)rising 
CHimors  from  all  parts  of  the  l'iiit(>(l  States  packing 
vegotablos  and  fruits  of  all  (lualitios,  has  dccidod  upon 
a  largo  advertising  ranipaign.  As  part  of  this  campaign 
and  as  a  moans  of  standardizing  ((ualitios,  an  inspection 
system  was  devised  whereby  members  willing  to  pay 
the  nominal  cost  of  such  inspection  could  have  their 
products  certified  and  could  use  a  sanitary  label  and 
seal.  This  sanitary  seal  was  to  be  f(;atured  in  the 
advertising,  and  consumers  were  to  be  admonished  to 
use  no  canned  goods  except  those  which  bore  the 
inspection  seal  used  by  the  Canners'  Association. 

A  very  large  proportion  of  canned  goods  produced 
in  the  Ignited  States  is  sold  through  brokerage  con- 
nections and  through  jobbers.  Wholesale  grocers  are, 
therefore,  almost  universally  large  dealers  in  canned 
goods  and  usually  the  only  ones  with  whom  the  average 
dealer  comes  in  contact.  The  National  Association 
of  Canners  has  asked  the  w^holesale  grocers  to  adopt  a 
resolution  urging  all  the  canners  from  whom  they  buy 
goods  to  use  this  seal. 

Question 
What  attitude  should  the  Safford  Wholesale  Grocery' 
Company  adopt  toward  this  resolution? 


Problem  132 

Private  Brands 

The  officers  of  Langdon  &  Wells,  Inc.,  a  firm  of 
wholesale  grocers,  are  concerned  w'ith  the  necessity  of 
deciding  upon  a  policy  with  reference  to  trade-marked 
goods.  I'he  concern  has  capital  and  resources  amount- 
ing to  $1,000,000  and  is  in  a  position  to  make  the 
necessary  arrangements  to  secure  private  brands  upon 


SALES  POLICIES  247 

caimed  goods,  cereals,  and  a  number  of  other  lines  which 
it  must  handle.  They  are  familiar  with  many  of  the 
arguments  for  private  brands;  one  of  the  board  of 
directors  (a  wholesale  grocer  of  long  experience)  states 
that  he  has  always  been  strong  for  private  brands, 
knowing  their  full  value  and  worth  to  the  wholesale 
grocer.  Nevertheless,  he  brings  up  the  question  as  to 
whether  there  is  a  field  in  which  private  labels  do  more 
harm  than  good;  and  if,  in  invading  such  a  field,  the 
jobbers  are  gratifying  their  own  pride  while  losing 
much  more  than  they  gain. 

Questions 

1.  What  advice  should  be  given  to  the  firm? 

2.  Are  there  lines  in  which  private  brands  are  clearly 
advantageous? 


Problem  133 

Trade-Marks  for  Different  Qualities 

of  the  Same  Product 

The  California  Fruit  Growers'  Association  has, 
through  its  merchandising  and  advertising  campaign, 
been  successful  in  selling  at  good  prices  the  best  grade 
of  fruit  grown  by  its  members,  under  the  brand 
"Sunkist." 

One  of  the  difficulties  which  has  arisen  out  of  this 
development  is  that  the  market  for  second-grade 
fruit  commonly  known  as  "choice"  has  become  smaller 
and  the  organization  has  found  it  difficult  to  secure  an 
outlet  for  its  production  of  this  grade.  A  report  of  the 
board  of  directors  contains  the  following  statements, 
advocating  use  of  "Sunkist"  for  "Choice,"  as  well  as 
best  grades: 


248 


I'HOHLEMS  IN  SALKS  MANA(  IKMENT 


There  are  certain  elementary  factors  concerning  the 
Cahfornia  citrus  business  and  our  advertising  which  should 
always  be  borne  in  mind; 

1.  We  are  oblified  to  sell  the  fruit  as  ^rown,  having  no 
control  over  grades,  sizes,  etc. 

2.  Pn)lial)ly  onc-thiid  of  oui-  fruit  is  below  l']xtra  ("hoice 
grade. 

3.  The  lower  grades  are  more  dillicult  to  sell  than  the 
higher. 

4.  The  ju'oposition  is  not  to  mix  the  grades,  Init  to  allow 
Sunkist  wrappers  to  be  used  on  the  "(Choice"  grades  only. 

5.  Our  advertising  is  directed  to  the  consumer. 

6.  Our  advertising  is  fundamentally  not  competitive; 
but  building  it  around  Sunkist  makes  Sunkist  fruit  com- 
petitive with  all  other,  including  our  other  grades. 

7.  Our  advertisements  do  not  feature  grade,  but  eating 
(luality — uniformly  good. 

8.  It  is  impossible  for  Sunkist  to  represent  a  uniform 
grade  with  the  different  conditions  in  different  districts  and 
houses;  as  to  grade,  it  only  means  above  a  certain  minimum. 

Question 
Is  it  good  policy  to  sell  more  than  one  quality  of  a 
product  under  the  same  brand? 


Problem  1.'34 

Brand  Policy — Using  Tavo  Brands  for 

Same  Line  of  Goods 

The  Potter  Company  manufactures  an  extensive 
hnc  of  women's  shoes  of  high  and  medium  grades.  It 
has  adopted  the  exclusive  agency  plan,  giving  the 
agency  for  its  branded  and  advertised  shoes  to  dealers 
in  both  larger  and  smaller  towns.  After  a  few  years' 
experience,    the   company   found    that   in   giving   the 


SALES  POLICIES  249 

exclusive  agency  to  a  dealer  in  a  larger  town  a  certain 
clientele  would  be  reached  by  that  agent  but  a  large 
possible  trade  would  not  be  reached  at  all.  In  the 
smaller  towns  the  company  often  had  dealers  who 
were  not  entirely  satisfactory,  but  the  policy  of  the 
company  had  always  been  to  carry  these  accounts 
nevertheless,  since  it  was  thought  cold-blooded  to 
shift  as  soon  as  there  was  any  evidence  of  not  reaching 
the  desired  quota.  Likewise,  the  company  received 
requests  from  shoe  dealers  in  towns  where  there  were 
already  exclusive  agents.  The  solution  which  the 
company  adopted  was  that  of  establishing  a  new 
brand — the  same  qualities,  same  line,  and  same  type 
of  advertising  for  which  exclusive  agencies  were 
granted  to  other  dealers  in  the  same  towns.  For  the 
most  part,  the  public  does  not  know  that  the  two 
brands  are  manufactured  by  the  same  concern.  They 
are  advertised  competitively  and  handled  by  competing 
merchants.  At  the  outset,  different  sales  forces  were 
used  for  pushing  the  two  brands,  but  in  time  it  was 
found  that  this  was  unnecessary.  The  same  sales 
force  now  handles  both  brands,  covering  the  two 
dealers  handling  the  brands  in  a  given  town.  The 
shoes  are  the  same,  but  care  is  taken  to  differentiate 
the  styles  sold  to  different  dealers  in  any  one  town. 

Questions 

1.  What  are  the  weaknesses  of  the  policy? 

2.  Under  what  conditions  is  it  practical? 

3.  Should  the  company  use    the   same   brands   for 
a  new  line  of  girls'  shoes? 


250        rUoHl.KMS  IN  SALES  MANAGEMENT 

Pl{()HLEM     l.S.> 
DlS'lUim  TION    I'OLHY 

The  loll()\viii<i;  iirc  brief  outlines  of  j)olic'ies  followed 
by  various  conccnis  witli  r('p;ar(l  to  channels  of  dis- 
tribution: 

(1)  The  Hull  Pai)t'i'  ( 'onipany,  of  Indianapolis, 
manufacturing  corrugiitcd  and  solid-fibre  shii)ping 
containers  entirely  uj)on  order,  sells  direct  to  manufac- 
turers and  users  of  shipping  cases;  sells  only  in  carload 
lots;  no  middleman  used. 

(2)  The  Whittemore  Motor  Accessory  Company, 
located  at  RufTalo,  manufactures  automotive  equip- 
ment and  specialties  such  as  electric  fittings,  switches, 
and  timers,  and  also  Ford  parts;  sells  to  accessory 
jobbers  exclusively. 

(3)  The  Prescott  Piano  Company  manufactures 
highest-grade  pianos,  both  grand  and  upright;  in  terri- 
tory near  factory,  sells  direct  to  consumers  through 
own  retail  stores;  in  territory  farther  away,  through 
retailers;  on  Pacific  Coast,  through  distributors  who 
in  turn  sell  to  retailers. 

(4)  The  Sleeper  Shoe  Company,  with  a  capacity  of 
40,000  pairs  a  day,  manufactures  women's  and  boys' 
medium-grade  shoes;  distributes  through  jobbers,  in 
whom  it  has  financial  interest,  who  resell  to  retailers 
in  exclusive  agencies. 

(5)  The  Myrick  Company,  manufacturing  tractors, 
separators,  motor  cultivators,  and  plows,  sells  through 
branch  houses  to  consumers  in  Middle  West;  through 
dealers,  west  of  Missouri  and  east  of  Ohio. 

(6)  The  Weston  Knitting  Company,  of  Utica,  New 
York,  sells  all  goods  through  selling  agent  in  New 
York  City. 

(7)  The  Barker  Specialty  Company  manufactures 
cloth  specialties  sold  to  manufacturers  and  advertisers; 
sells  through  manufacturers'  agents  entirely,  one  agent 
in  each  of  10  teiTitories  being  given  exclusive  sales 
rights  for  a  carefully  defined  area. 


A 


SALES  POLICIES  251 

(8)  A  concern  manufacturing  a  line  of  brushes  for 
household  use  sells  direct  to  consumers  through  sales- 
men in  charge  of  local  sales  managers  in  110  cities  of 
the  United  States. 

(9)  The  Chase  ^Manufacturing  Company  produces 
piston  rings  used  by  manufacturers  of  gasoline  engines, 
automobile  manufacturers,  etc. ;  sells  direct  to  manufac- 
turers on  basis  of  yearly  contracts. 

(10)  The  Hampton  Company,  manufacturing  men's 
cravats,  sells  exclusively  by  mail  to  retailers. 

(11)  The  Capen  Typewriter  Company  sells  direct 
to  consumers  through  a  system  of  branch  houses. 

(12)  The  Sanborn  Milling  Company  sells  fancy 
patent  and  other  grades  of  flour  to  jobbers,  direct  to 
retailers  in  carload  lots,  through  brokers,  and  direct 
to  bakers. 

(13)  A  company  manufacturing  automatic,  instan- 
taneous gas  water-heaters  and  other  gas  heaters  sells 
through  branches  in  25  cities,  direct  to  gas  companies, 
to  plumbers,  and  direct  to  users,  maintaining  the  same 
prices  as  gas  companies'  or  plumbers'  resale  prices;  in 
territory  outside  branch  territories,  sales  are  made  only 
to  dealers  consisting  of  gas  companies  and  plumbers. 

Questions 
With  respect  to   the  above,   answer  the  following 
questions: 

1.  Is  the  distribution  policy  indicated  the  one 
which  is  most  advantageous  to  the  company,  irre- 
spective of  its  financial  strength,  or  would  a  change  in 
internal  conditions  of  the  company  possibly  involve  a 
change  in  distribution  policy? 

2.  What  are  the  alternative  policies  in  each  case? 

3.  Is  the  distribution  policy  designed  to  secure 
continuance  of  good  will,  both  of  necessary  distributors 
and  of  consumers? 


•JaJ         PKOHLEMS  IN  SAIj;s  MAXACIEMKNT 

PUOMLK.M     l.Sd 
I  )iSTKlHLTl()N     Pol.HV 

The  Hciidiick  (\)mpaiiy,  manufacturing  asbestos 
pipe  coverings,  sells  direct  to  plumbing  supply  houses 
and  to  ])lumbors  direct.  Considerable  friction  has 
arisen,  jobbers  of  plumbing  and  heating  supplies 
objecting  to  direct  sale  on  the  ground  that  the  manu- 
facturer thereby  becomes  the  competitor  of  the  jobber 
in  his  own  line  of  goods. 

Question 
Is  it  possible  to  continue  the  policy  of  selling  to  both 
jobbers  and  retailers? 


Problkm  137 
DisTKinuTioN  Policy 

In  January,  1921,  the  California  Associated  Raisin 
Company  issued  the  following  statement  to  wholesalers : 

We  have  decided  to  open  bi-anch  offices  in  the  principal 
distributing  centers  of  the  United  States,  and  will,  therefore, 
discontinue  selling  through  brokers  on  June  of  this  year. 

The  personnel  of  these  offices  will  consist  of  a  sales 
manager,  under  whose  direction  a  number  of  specialty  men 
will  work  in  the  surroundiuti  tei-ritorv.  We  have  considered 
this  change  very  carefully  for  more  than  a  year  and  are  now 
making  it,  l)elieving  that  it  is  not  only  to  the  advantage  of 
ourselves,  but  both  to  the  wholesale  and  retail  trade.  Our 
brokers,  in  most  cases,  have  rendered  us  a  splendid  service, 
but  in  the  veiy  nature  of  things  they  cannot  render  to  us 
the  service  of  men  who  are  devoting  all  of  their  time  to,  and 
whose  sole  purpose  in  life  is,  the  selling  of  more  "Sun-Maid" 
raisins. 

With  the  changing  economic  conditions,  plus  the  fact 
that  we  expect  the  production  of  raisins  to  double  in  the 
next  ten  years,  makes  the  problem  of  merchandising  our 
goods  a  tremendous  one,  and  we  are  making  this  change 
not  because  we  believe  we  can  save  money  by  doing  so,  but, 
even   though   it    costs   us   more   money,    we   can   sell   more 


SALES  POLICIES  253 

raisins,  and  if  we  are  right  in  this  conclusion  the  advantage 
will  not  only  be  to  ourselves  but  to  both  the  wholesale  and 
retail  trade. 

The  New  York  trade  journals  have  given  wide  publicity 
to  the  statement  that  this  is  but  a  step  toward  the  elimination 
of  the  wholesale  jo])l)er  and  a  "direct  to  the  retail  trade" 
method  of  merchandising.  Of  this  we  wish  to  most  emphati- 
cally disal)use  your  minds.  Years  ago  we  gave  the  question 
of  direct  selling  a  great  deal  of  thought,  with  the  conclusion 
that  you,  as  jobbers,  were  rendering  us  a  service  that  we 
could  not  begin  to  duplicate  for  the  amount  of  your  profits, 
and  we  still  l)elieve  this  to  be  true. 

It  is,  therefore,  not  our  purpose  to  attempt  to  eliminate 
you  in  the  handling  of  our  product,  but,  on  the  other  hand, 
we  believe  it  will  be  possible  through  the  new  plan  to  work 
closer  with  you  than  ever  before,  and  it  is  our  ambition  to 
so  conduct  ourselves  that  we  may  merit  your  good  will  and 
may  have  your  cooperation  in  the  marketing  of  our  crops 
to  even  a  greater  degree  in  the  future  than  in  the  past,  and 
in  announcing  this  change  we  do  so  feeling  sure  that  it  will 
be  not  only  to  our  advantage  l)ut  to  yours  also. 

We  are  an  organization  of  producers  organized  because 
as  individuals  we  sold  our  crops  year  after  year  for  less  than 
the  cost  of  production,  and  the  only  justification  for  our 
organization  now  is  that  we  may  sell  our  crops  for  something 
in  excess  of  what  it  costs  to  produce  them.  And  in  spite 
of  the  criticisms  of  those  who  misunderstand  or  misjudge 
us,  our  sole  purpose  is  that  we  may  sell  more  raisins  at  a 
price  that  will  show  a  reasonable  profit  to  everyone  who 
as  producers  or  distributers  renders  the  industry  a  legitimate 
service,  and  we  count  you  among  that  number. 

The  raisin  company  will  establish  fifteen  district  offices, 
each  under  a  district  manager.  Thirteen  sub-offices  will  be 
opened,  with  fifty-eight  resident  salesmen,  and  in  addition 
to  these  forces,  a  corps  of  specialty  men  will  be  maintained, 
sufficient  in  number  to  fully  cover  the  trade  throughout 
the  country. 

Questions 

1.  Is  the  change  in  policy  advisable? 

2.  What  difficulties  will  be  encountered  in  dis- 
pensing with  the  brokerage  organization? 

3.  Criticize  the  proposed  plan  of  organization. 


2:A         PK()HL1;MS   IN  SALl'lS  MAXAr,KMKNT 

i'uohlkm    ish 
Policy  as   io  (iiannkls  of  Disthiiuition 

The  Arkansas  State  Association  of  Wholosalo  (Irocers, 
at  a  recent  meeting  (1921),  adopted  a  resolution  that 
manufacturers  sliould  Ix'  r('(|uired  to  select  one  channel 
of  trade  throuf2;h  which  they  desired  to  market  their 
products  and  that  selling  to  retailers  as  well  as  whole- 
salers constituted  discrimination.  In  other  words,  the 
manufacturer  nuist  sell  direct  to  consumers  solely, 
direct  to  retail  dealers  only,  or  exclusively  to  whole- 
salers. 

The  resolutions  were  sent  to  tlie  I'ederal  Trade  Com- 
mission, with  the  request  that  it  make  a  ruling  to  carry 
out  the  ])urposes  of  the  resolutions.  The  reply  of  the 
Federal  Trade  Commission  is  to  the  effect  that  the 
Commission  has  no  authority  to  make  such  ruling  and 
that  members  of  the  Commission  fail  to  find  any 
warrant  in  law  for  the  proposition  expressed  in  the 
motion,  for  the  reason  that  the  manufacturer  has  the 
legal  right  to  make  his  own  selection  of  customers, 
provided  that  in  so  doing  he  does  not  make  his  selection 
in  restraint  of  trade. 

Question 
Would   the   interests   of   w^holesalers  be   served   by 
such  a  policy? 


Pkoble.m  13!) 
Distribution  Polk  y 

Many  manufacturers  of  identified  products  feel  that, 
through  developments  of  the  past  two  or  three  decades, 
the  functions  of  job))ers,  retailers,  and  manufacturers 
with  regard  to  distribution,  have  become  very  much 
confused.  Through  their  own  jirivate  brands  and 
through  their  own  factories,  many  jobbers  have  become 
competitors  of  the  manufacturers  whose  branded  goods 


SALES  POLICIES  255 

they  also  handle.  Retail  chain  stores  sometimes 
engage  in  wholesaling  and  in  the  manufacture  of  the 
products  they  sell,  thus  competing  with  the  other 
manufacturers  whose  goods  are  also  stocked. 

As  a  consequence,  it  has  been  suggested  by  the  sales 
manager  of  a  certain  concern  that  a  group  of  manufac- 
turers of  standard  lines  undertake  their  own  distribu- 
tion to  the  retailer,  estabhshing  a  joint  sales  organiza- 
tion and  competing  with  present  jobbing  houses, 
which  would  not,  of  course,  handle  their  goods. 

Question 
What  are  the  merits  and  demerits  of  this  plan? 


Problem  140 
Distribution  Policy 

A  prominent  soap  company,  which  recently  changed 
its  distribution  policy  radically  by  dispensing  with  the 
services  of  wholesalers  and  going  directly  to  retailers, 
gave  rise  to  a  great  deal  of  discussion  by  wholesale 
grocery  interests.  Typical  of  these  comments  is  the 
following,  taken  from  the  Journal  of  Commerce  & 
Commercial  Bulletin: 

Much  has  been  said  by  the  press  and  through  other 
sources  that  a  prominent  soap  and  shortening  manufacturer 
had  eliminated  the  jobbers  and  wholesalers  by  deciding  to 
market  its  products  direct  to  the  retail  dealers.  I  beg  to 
differ  with  those  statements,  however,  and  will  endeavor 
to  show  that  the  manufacturer  has  gone  into  the  jobbing 
business. 

What  are  the  functions  of  a  jobber  or  wholesaler  toward 
distributing  or  marketing  of  products? 

L  He  secures  a  building  commonly  called  a  warehouse. 

2.  He  gathers  together  an  organization  as  follows: 
Manager,  sales  manager,  credit  department,  buyers,  office 
force  of  bookkeepers,  clerks  and  stenographers,  salesmen, 
shipping  clerks,  warehousemen  and  truckmen. 


25()        PROHT.KMS  IX  SALES  MANAGEMENT 

li.   lie  purchases  floods  from  the  manufacturer  or  packer. 

4.  Tlic  railroads  haul  the  ficitiht  from  Ihc  manufacturer 
to  tho  jol)l)er's  warcliousc. 

5.  The  johhci-  ston's  the  commodity. 

().  The  jol)l)or  shi|)s  and  dist ril»utes  in  smaller  quantities 
to  the  r(>tailers. 

7.  The  (roods  are  invoicetj  ;ind  collections  made  for  the 
same. 

Let  me  ask  you  these  (|Uestions: 
L    Does  not  the  mamitacturer  secure  a  warehouse? 

2.  Ls  not  his  district  sales  manajjer  or  territorial  man 
a  manager? 

3.  Does  he  not  have  salesmen? 

4.  Has  he  not  a  foice  of  bookkeepers,  stenographers  and 
clerks? 

5.  Who  passes  on  the  orders  secured  by  the  salesmen? 
Is  it  not  the  credit  manager? 

6.  If  the  district  sales  manager  or  territorial  man  looks 
over  orders  and  sends  a  requisition  for  stock,  is  he  not  a 
buyer? 

7.  How  are  the  goods  transpoi-ted  to  the  warehouse? 
Is  it  not  done  by  the  railroads? 

8.  Are  not  the  goods  stored  in  the  various  warehouses? 

9.  Does  not  the  manufacturer  send  a  list  of  shipments 
and  deliveries  to  the  warehouse  to  be  forwarded  to  the 
retailer? 

10.  Have  not  the  warehouse  people  an  overseer  or  ship- 
ping clerk? 

n.  Have  not  they  got  to  have  warehousemen  and  truck 
drivers? 

12.  Are  not  the  goods  invoiced  and  collections  made  for 
the  same  by  the  manufacturer? 

13.  Do  the  warehouse  people  go  to  all  this  expense  with 
no  reimbursement? 

14.  Who  pays  the  warehouse  people  for  storage  and 
labor? 

15.  Is  not  all  this  expense  paid  by  the  manufacturer? 

I  again  repeat,  the  manufacturer  who  endeavors  to 
distribute  by  a  so-called  direct  way  to  the  retailer  using 
warehouses,  which  he  must  do,  is  nothing  more  nor  less 
than  a  jobber.     Then  is  the  jobber  eliminated? 


SALES  POLICIES  257 

Questions 

1.  Does  this  state  the  whole  case? 

2.  To  what  extent  do  the  obvious  answers  to  these 
questions  justify  retention  of  the  wholesaler  in  dis- 
tribution? 

3.  To  what  extent  are  they  immaterial? 


Problem  141 
Distribution  Policy — Financial  Control 

(a)  The  Wheat  Company  controls  eight  large 
factories  manufacturing  complete  hne  of  men's, 
women's,  and  children's  shoes.  The  factories  are 
located  in  Brockton  and  Lynn,  Massachusetts.  The 
product  is  divided  into  two  lines:  one  a  trade-marked 
Hne,  which  is  widely  advertised;  the  other  a  line  con- 
stituting about  half  of  the  production,  upon  which 
retailers'  or  jobbers'  marks  are  placed.  It  has  been 
the  custom  of  the  Wheat  Company  to  sell  through 
wholesalers  in  various  parts  of  the  country.  They  have 
under  consideration  the  plan  of  acquiring  an  interest 
in  four  leading  wholesalers  located  in  Boston,  Philadel- 
phia, Chicago,  and  St.  Louis. 

Questions 
What   are    the    advantages   and    disadvantages   of 
securing 

(a)  A  minority  interest  in  these  wholesale  con- 
cerns; 

(6)  A  majority  or  complete  control? 


258      i>1{()hij;ms  in  salp:s  management 

(6)  The  WifiKiii  Kuittinfi;  Works,  of  Grand  Rapids, 
Michigan,  has  purchased  an  interest  in  the  Tamblyn  & 
Larnard  Company,  selling  agents  for  various  mills. 
Two  members  of  the  hoard  of  directors  of  the  Wiggin 
Knitting  Works  will  represent  the  company  on  the 
board  of  directors  of  the  selling  company.  This 
selling  company  has  had  the  sale  of  the  Wiggin  line 
for  th(^  j)ast  15  years.  Purchase  of  this  interest  by 
the  Knitting  Works  marks  a  change  in  the  company's 
affairs  from  a  whole-line  agency  into  a  direct  selling 
outlet  for  the  Coe  Knitting  Cori)oration  and  the 
Wiggin  Knitting  Works.  The  Coe  Knitting  Corpora- 
tion, operating  five  knitting  works  in  Maine,  previously 
acquired  an  interest  through  the  holdings  of  its  general 
manager  and  vice-president.  It  also  happens  that  the 
principal  stockholders  in  the  Wiggin  Knitting  Works 
are  likewise  large  stockholders  in  the  Coe  Knitting  Cor- 
poration. The  combined  productions  of  the  two 
companies  make  a  complete  line  of  knit  underwear,  and 
it  would  be  unnecessary  for  the  selling  company  to 
take  on  other  mills  to  have  a  complete  line.  The 
control  of  the  selling  company,  it  is  said,  will  make  for 
economy  in  the  distribution  of  products  and  will  make 
the  carrying  out  of  plans  for  developing  business  on  a 
much  larger  scale. 

Question 
Should   the   Wiggin   Knitting   Works  and  the  Coe 
Knitting    Corporation    consolidate    and    establish    a 
selling  department? 


SALES  POLICIES  259 

Problem  142 
Distribution  Through  Manufacturers'  Retail  Stores 

The  Garrison  Company  started  in  business  as 
clothing  manufacturers.  In  1868  they  commenced  to 
retail  the  production  of  their  own  workshops.  Begin- 
ning with  one  store,  the  company  now  has  seventeen 
in  as  many  important  cities  of  the  United  States,  and 
its  entire  output  is  now  sold  through  its  own  retail 
stores.  The  factory  manufactures  exclusively  for  these 
stores,  although,  the  stores  handle  many  articles  of 
men's  furnishings  which  are  manufactured  elsewhere. 

On  the  other  hand,  the  MacVicar  Company,  manufac- 
turing a  widely  advertised,  trade-marked  line  of  men's 
clothing,  has  no  retail  stores  of  its  own  but  appoints 
exclusive  agents  in  towns  of  1,000  and  upward. 

Question 
Are  there  fundamental  reasons  for  such  difference  in 
policy,  if  financial  circumstances  in  each  case  do  not 
restrict  choice? 


Problem  143 
Manufacturers'  Retail  Stores 

The  Seymour  Company  has  recently  acquired  a 
factory  in  which  it  plans  to  manufacture  a  high-grade, 
trade-marked  shoe.  In  studying  the  problems  of  dis- 
tribution policy,  the  president  finds  that  some  of  his 
most  prominent  competitors  have  established  their 
own  stores,  at  least  in  the  larger  cities.  He  finds 
certain  other  manufacturers,  who  are  apparently  just 
as  successful  and  who  distribute  entirely  through 
dealers.  Although  it  would  be  possible  for  him  to 
secure  capital,  he  does  not  feel  that  stores  should  be 


2GU         l'l{OHLi;.MS   1\  SALKS  MANACEMENT 

('stal)lisli('(l  unless  their  advuiiUigo  can  be  very  clearly 
demonstrated.  lie  realizes  that,  with  his  own  stores, 
the  consumer  advertising  campaign  which  he  has 
planned  could  he  perfectly  supi)orted.  While  the 
advantage  is  sometimes  claimed  that  retail  prices  can 
be  lowered,  he  is  doubtful  as  to  this,  particularly  in  the 
early  development  of  the  enterprise.  Nevertheless, 
he  feels  that,  in  actual  contact  with  the  consumer,  he 
cannot  onl}'  avoid  substitution  but  can  study  the 
consumer  and  his  tastes,  so  that  the  product  can  be 
impro\ed,  new  selling  points  developed,  and  experience 
gained  in  actual  retailing  practice,  which  can  be  turned 
to  account  in  dealing  with  independent  retailers, 
should  he  desire  to  market  part  of  his  product  outside 
his  own  stores.  Although  independent  dealers  may  be 
sometimes  secured  through  the  example  of  successful 
company  stores,  there  is  great  danger  that  prospective 
dealers  will  look  upon  company  stores  as  an  attempt 
to  comjiete  directly  and  will  either  refuse  to  handle  or 
push  the  line,  so  long  as  they  know  that  the  company 
also  sells  direct  to  consumers.  Financially,  stores  may 
be  losing  propositions,  particularly  when  they  are 
operated  for  the  purpose  of  demonstrating  new  ideas 
or  of  impressing  independent  dealers.  While  fre- 
quently road  salesmen  can  be  trained  in  these  stores, 
the  personnel  problem  is  one  of  the  most  difficult  ones 
in  connection  with  the  management  of  any  chain  of 
establishments  of  this  kind. 

Questio)! 
Since  the  aim  of  the  Seymour  Company  and  its 
president  is  not  to  develop  a  small  volume  selling  at 
high  prices  to  an  exclusive  trade,  but  to  develop  as 
large  a  business  as  possible  in  high-grade  shoes,  selling 
at  perhaps  lower  than  usual  prices  for  similar  qualities, 
what  considerations  should  determine  the  policy  with 
reference  to  retail  stores? 


SALES  POLICIES  261 

Problem  144 
Exclusive  Agencies 

(a)  Whether  selling  through  jobbers  or  direct  to  re- 
tailers, many  manufacturers  of  identified  goods,  particu- 
larly those  which  have  been  more  or  less  advertised, 
have  had  to  formulate  a  policy  with  regard  to  the  grant- 
ing of  exclusive  agencies.     The  three  alternatives  are : 

(1)  Refusal  to  grant  exclusive  agencies  under  any 
conditions; 

(2)  Granting  exclusive  agencies  under  certain  con- 
ditions or  in  certain  sized  cities,  but  refusing  such 
agencies  in  larger  communities; 

(3)  The  use  of  exclusive  representatives  for  the 
entire  sale  of  goods  of  the  manufacturers. 

Manufacturers  of  men's  branded,  advertised  clothing 
commonly  adhere  to  the  exclusive  agency  plan  on  the 
basis  that,  in  order  to  get  the  cooperation  of  the  retailer 
and  secure  his  interest  in  advertising  and  supporting  a 
particular  line,  he  must  be  assured  of  the  exclusive 
right  to  sell  the  product  in  his  own  territory. 

Underwear  and  hosiery  manufacturers  are  instances 
of  firms  using  each  of  the  different  policies.  One  firm 
gives  exclusive  selling  rights  for  its  entire  line  or 
exclusive  rights  for  either  men's,  women's  or  children's 
sections  of  the  line. 

Manufacturers  of  heating  apparatus  and  of  certain 
types  of  electrical  supplies  and  larger  household 
appliances  very  commonly  adopt  the  policy  of  selling 
through  only  one  dealer  in  a  community.  On  the 
other  hand,  nationally  advertised  products  handled  by 
druggists  and  grocers  ordinarily  have  not  been  dis- 
tributed on  the  exclusive  agency  plan. 

Questions 
1.  Is  the  statement  valid  that  for  shopping  goods, 
exclusive   agencies   are   usually   advisable;   while   for 
convenience  goods,   exclusive  agencies  are   ordinarily 
inadvisable? 


2(V2        PROBLEMS  IN  SALES  MANAGEMENT 

2,  Does  the  size  of  the  investment  required  for 
stockinp;  ;i  nuinufacturor's  line  of  goods  have  any  direct 
bearing  upon  the  exchisive  agency  policy? 

3.  Should  the  manufacturers  of  the  following  prod- 
ucts use  the  exclusive  agency  method? 

(a)  High-grade  ])ackage  chocolates. 
(6)  Women's  branded  clothing. 

(c)  Kitchen  cabinets. 

(d)  Carpenters'  tools. 

(e)  Cheap  cotton  hosiery. 
(/)   Package  coffee. 

(g)   Automobile  shock  absorber. 
(h)  Paints  and  varnishes. 


(6)  Some  years  ago,  a  leading  candy-manufacturing 
company  received  an  offer  from  a  large  dealer  located 
on  the  Boardwalk  at  Atlantic  City  to  handle  the 
concern's  candies  exclusively,  provided  he  were  given 
a  contract  for  the  entire  Boardwalk. 

Questioti 
1.  What  should  the  candy  manufacturer  have  done? 


Problem  145 

Exclusive  Agency 

The  following  is  quoted  from  a  letter  to  the  Harvard 
Bureau  of  Business  Research  from  a  manufacturing 
concern  located  in  Omaha,  Nebraska: 

I  will  state  our  problem  as  briefly  as  possible  and  will 
appreciate  am^  suggestions  that  you  may  see  fit  to  make. 


SALES  POLICIES  263 

We  are  a  small  concern  doing  business  on  about  $16,000; 
one-half  of  this  is  already  tied  up  in  our  machinery.  Our 
chief  product  is  a  curtain  frame  for  drying  curtains.  This 
frame  has  been  endorsed  by  some  of  the  largest  laundries  and 
cleansing  concerns  in  the  United  States.  We  have  been 
offered  a  considerable  sum  of  money  for  our  patent  rights, 
but  we  have  decided  to  manufacture  and  sell  it  ourselves, 
for  we  believe  that  we  can  realize  three  times  the  amount 
of  money  offered. 

Up  to  date  we  have  not  been  able  to  produce  more  than 
three  a  week,  and  these  have  found  a  ready  market.  Now 
our  facilities  are  such  that  we  can  manufacture  ten  a  week 
or  even  more.  One  thing  that  we  have  to  bear  in  mind  is 
that  we  must  canvass  our  field,  viz.:  hotels,  laundries,  and 
cleansing  houses,  in  as  short  a  time  as  possible.  There  is 
always  the  fear  that  some  other  invention  or  some  similar 
machine  will  make  its  appearance.  Our  machine  sells  for 
$200. 

Several  concerns  have  asked  us  for  the  agency  of  this 
frame,  but  we  have  refused.  Do  you  think  it  would  be 
advisable  to  grant  exclusive  agencies  to  a  number  of  these 
agencies  and  thus  cover  the  whole  field  of  the  United  States? 
They  all  require  a  20%  commission.  Our  present  selling 
cost  is  approximately  10%.  With  these  agencies  we  would 
undoubtedly  increase  our  sales  400%,  or  in  other  words  sell 
24  frames  a  week.  In  a  year's  time  we  would  make  a  larger 
gross  profit,  and  at  the  same  time  have  a  larger  percentage 
of  our  field  covered. 

What  suggestions  have  you  to  offer?  Thanking  you  in 
advance  for  your  advice  on  the  matter,  I  remain 

Very  truly  yours, 
The  Stover  Manufacturing  Co. 

Question 
Answer  this  letter,   giving  what  you   think  is  the 
proper  advice. 


2()4        PliOBLEMS  IN  SALES  MANAGEMENT 

Problem  146 
Attitude  Toward  Newer  Type  of  Buyers 

During  the  early  part  of  1919,  a  conference  of 
farmers  was  called  by  the  Kansas  State  Board  of 
Agriculture  to  consider  a  cooperative  buying  plan  put 
out  by  the  board.  In  this  plan  there  are  three  basic 
principles  rigidly  insisted  upon. 

In  the  first  place,  the  farmers  must  pay  cash  on 
receipt  of  the  goods.  For  doing  this  it  is  planned  that 
each  buying  unit  shall  create  a  special  fund  in  its  local 
bank  against  which  drafts  covering  shipments  may  be 
drawn. 

Second,  the  farmers  must  order  goods  possibly  six 
months  in  advance,  much  as  some  merchants  do. 
This  is  to  get  away  from  the  expense  of  carrying  a 
stock  of  goods  from  which  the  farm.er  may  select  what 
he  wants. 

Third,  the  farmers  must  standardize  their  require- 
ments. Each  county  must  bunch  its  orders  and  only 
orders  for  carload  lots  will  be  accepted.  Thus  the 
State  farmers'  purchasing  bureau  will  be  in  a  position 
to  order  fifty  or  a  hundred  carloads  at  one  time  and 
aims  to  secure  the  lowest  possible  price. 

For  the  present  the  bureau  proposes  to  handle  only 
such  staple  commodities  as  farm  machinery,  binding 
twine,  salt,  flour,  feeds,  and  coal.  It  will  have  no 
warehouses,  hoping  thus  to  be  able  to  operate  on  small 
capital.  The  goods  purchased  will  be  shipped  direct 
from  the  manufacturer  to  the  units  by  whom  they  are 
ordered,  j 

Question 

Providing  the  plan  is  adopted  and  manufacturers 
are  asked  to  quote  prices,  what  policy  should  they 
adopt? 


SALES  POLICIES  265 

Problem  147 
Policy  Regarding  Sale  to  Chain  Stores 

(a)  The  Slocum  Company  manufactures  a  line  of 
high-grade  crackers  and  biscuits,  which  are  sold  direct 
to  retailers  throughout  the  United  States,  more  par- 
ticularly in  the  eastern  territory.  The  business  has  in 
the  last  few  years  increased  rapidly  until,  at  the 
opening  of  1921,  the  company  was  selling  biscuits  at 
the  rate  of  $1,000,000  per  year.  A  new  factory *had 
just  been  completed,  which  gave  increased  capacity. 

In  February  the  company  was  asked  to  submit 
samples  to  buyers  for  a  large  grocery  chain  comprising 
over  three  hundred  stores.  These  were  submitted 
and  compared  with  the  crackers  and  biscuits  then 
being  handled  by  this  chain.  In  the  course  of  a  few 
days,  the  chain  declared  itself  ready  to  handle  the 
biscuit  and  was  given  the  usual  terms  for  large  pur- 
chasers. 

Questio7is 

1.  Since  the  annual  purchases  would  amount  to  from 
$300,000  to  $500,000,  should  the  Slocum  Company 
have  accepted  this  order? 

2.  If  so,  under  what  conditions? 


(6)  The  Billings  Company,  which  manufactures  a 
line  of  tools  with  established  reputation,  has  distributed 
its  product  through  wholesalers  since  the  organization 
of  the  company.  It  has  never  sold  direct  to  retailers. 
Through  advertising  it  has  established  its  own  brands, 
and  there  has  been  no  difficulty  in  disposing  of  the  out- 
put of  the  factory  on  the  basis  of  quality. 

In  January,  1920,  this  company  was  approached  bj' 
the  representative  of  a  proposed  chain  of  hardware 


20(5        PROBLIOMS  IN  SALI']S  MANAGEMENT 

stores,  who  offered  to  buy  a  large  portion  of  the  output 
of  this  phmt.  There  was  no  request  for  private  brands, 
and  the  represcMitative  was  willing  to  pay  the  price 
usually  (luoted  for  largest  quantities. 

Question 
Should  the  company  accept  the  contract? 


(c)  The  Taylor  Company  manufactures  a  hne  of 
nationally  advertised  soaps  and  toilet  preparations 
which  are  distributed  through  drug  stores  throughout 
the  United  States.  The  officials  of  the  company  are 
thoroughly  convinced  that  the  maintenance  of  resale 
prices  is  the  correct  policy  and  are  endeavoring  to  carry 
it  out  by  several  legitimate  means.  Quantity  discounts 
are  not  given  for  large  purchases.  The  products  are 
sold  in  chain  drug  stores,  though  generally  at  no  im- 
portant deduction  from  fixed  resale  prices.  The  sales 
manager  of  this  company  has  learned  that  a  certain 
chain  to  whom  they  are  selling  is  giving  substantial 
premiums  to  retail  clerks  to  push  their  private  brands 
of  toilet  preparations  which  compete  with  those 
manufactured  by  the  Taylor  Company. 

Question 
Does  the  situation  require  any  action  on  the  part 
of  the  sales  manager? 


SALES  POLICIES  267 

Problem  148 

Policy  Regarding  Sale  to  Mail-Okder 

Houses  and  Chains 

The  Snyder  &  Long  Company  is  a  firm  of  commission 
agents  selling  entirely  through  jobbers  located  through- 
out the  United  States.  It  either  owns  or  is  closely 
identified  with  the  six  mills  for  which  it  sells.  One  of 
the  mills  manufactures  muslin,  which  for  the  last  40 
years  has  been  sold  under  the  trade-mark  ''Pride  of  the 
West."  Approximately  80%  of  the  sales  of  this  muslin 
have  been  in  the  Middle  West. 

During  the  early  part  of  1918  the  company  received 
two  large  orders  for  this  muslin,  one  from  a  large  mail- 
order house  and  the  other  from  a  chain  of  50-cent  and 
dollar  stores.  This  chain  consisted  of  30  stores  locat- 
ed in  many  of  the  cities  and  towns  of  Ohio  and  Illinois 
having  a  population  of  15,000;  a  few  of  the  stores 
were  situated  in  smaller  towns. 

Questio)} 
What  factors  should  the  Snyder  &  Long  Company 
have  taken  into  consideration  before  reaching  a  deci- 
sion on  these  two  orders? 


Problem  149 
Policy  Regarding  Sale  to  Mail-Order  Houses 

The  manufacturer  of  a  security  auto  thief  signal  is 
confronted  with  the  problem  of  whether  to  sell  mail- 
order houses  at  the  risk  of  jeopardizing  his  jobber 
house  connection  and  good  will  of  retailers. 

Some  consumer  advertising  has  been  done,  but  it 
cannot  be  said  that  there  is  a  constant  demand  for  the 
commodity  which  will  allow  the  manufacturer  to 
dictate  to  the  jobber  and  retailer. 

Question 
What  should  be  the  decision? 


26H        PHOIiLKMS  IN  SALES  MANAGEMENT 
Problem  150 

S ALIOS    PoLlC'V 

Coimiiittees  of  Uk'  Canadian  Wholesale  Cirocers' 
Association,  appointed  at  a  convention  in  1919,  were 
asked  to  come  to  some  agreement  upon  the  following 
(}uesti()iis: 

1.  I)(j  yuu  fonsidcr  that  \vhok':5aie  j^rueors  should  sell 
direct  to  hotels,  restaurants,  farmers'  clubs,  co-operative 
societies,  mail  order  houses,  chain  stores,  and  to  customers 
who  are  not  actively  engaged  in  the  retail  trade? 

2.  Do  you  consider  that  the  wholesale  and  retail  trade 
should  carry  the  stocks  of  the  different  staple  lines  of  goods, 
such  as  canned  vegetables,  fruits  and  fish,  jams  and  jellies, 
etc.,  by  placing  orders  in  advance? 

3.  Provided  the  wholesale  trade  agrees  to  eliminate  a 
great  many  injurious  practices  that  are  now  carried  on  in 
the  trade,  do  you  consider  that  it  would  be  advisable  for 
us  to  agree  to  nuike  all  our  purchases  through  the  wholesale 
trade  of  the  goods  that  the  wholesale  grocers  handle  and 
which  wc  recpiire,  instead  of  buying  tlircct  from  the  manu- 
facturers? 

4.  Do  you  consitler  that  wholesale  grocers  should  sell 
to  persons  who  have  no  knowledge  of  the  grocer}''  business 
and  supph^  them  with  more  stock  than  the\'  have  capital? 

5.  Would  you  be  in  favor  through  the  grocers'  section 
of  our  association,  of  giving  retail  grocers  a  certificate 
stating  that  they  are  qualified  retail  grocers? 

6.  Do  you  consider  it  advisable  that  wholesale  grocers 
should  sell  to  retail  grocers  who  have  failed  in  l)usiness,  and 
who  have  been  in  the  habit  of  price-cutting,  and  who  have 
settled  their  liabilities  at  a  jicrcentage  on  the  dollar,  more 
than  once? 

Questio7i 
As  a  wholesale  grocer,  what  would  seem  to  you  a 
fair  basis  for  agreement? 


SALES  POLICIES  269 

Problem  151 
Determining  Policy  as  to  Price  Level 

In  1919  the  Stann  Company,  of  Boston,  bought  out 
at  a  receivership  sale  the  plant  and  good  will  of  the 
Devoe  Beverage  Company.  Among  the  products  that 
the  Devoe  Company  had  produced  was  a  high-priced 
bottled  beverage  on  which  had  been  spent  nearly  a 
half-million  dollars  in  advertising.  The  attempt  to 
develop  a  profitable  business,  however,  had  met  with 
little  success.  Based  on  the  experience  of  the  Devoe 
Company  is  seemed  useless  to  the  Stann  management 
to  spend  more  money  ad\'ertising  this  be^'erage,  the 
sales  and  profits  of  which  were  just  large  enough  to 
pay  the  overhead  charges  of  the  plant  purchased  at 
the  receivership  sale.  On  the  other  hand,  the  manufac- 
ture of  this  article  took  only  about  15  to  20%  of  the 
capacity  of  the  plant.  The  experience  of  the  Devoe 
Company  indicated  conclusively  to  the  board  of  direc- 
tors of  the  Stann  Company  that  practically  no  addi- 
tional business  could  be  obtained  by  a  reduction  in 
price,  nor  could  an  increase  be  expected  from  addi- 
tional advertising. 

The  president  of  the  Stann  Company  believed  that 
the  solution  of  their  trouble  was  to  produce  a  different 
beverage.  Accordingly  he  made  a  preliminary  investi- 
gation of  the  situation  and  found  what  he  believed  was 
a  beverage  that  had  every  indication  of  becoming  a 
big  seller.  The  product  was  tried  out  for  a  short  period. 
The  management  was  convinced  by  this  trial  that  if 
the  new  beverage  was  to  be  marketed  successfully  it 
would  have  to  be  sold  by  retailers  to  the  consumer  at 
25  cents.  To  raise  the  price  would  destroy  the  pos- 
sibility of  large  sales.  The  president  had  cost  fig- 
ures which  showed  that  if  only  two  direct  manufac- 
turing costs,  namely,  materials  and  labor,  were  charged 
against  this  beverage  it  could  be  produced  and  return 
a  small  margin  of  profit  to  the  company.  After  care- 
fully reviewing  the  cost  figures  he  suggested  to  the 
board  of  directors  that  the  new  beverage  be  produced 
and  that  all  overhead  expenses  except  materials  and 


270        PROBLEMS  IN  SALES  MANAGEMENT 

labor  should  not  be  charged  jigaiust  this  product,  that 
the  manufacture  of  the  old  beverage  be  continued, 
which  would,  from  the  experience  of  the  Devoe  Com- 
pany, net  a  sufficient  profit  to  meet  the  other  operating 
expenses  of  the  plant. 

Two  members  of  the  board  of  directors  took  a  stand 
against  such  a  procedure.  They  maintained  that  it 
was  poor  business  policy  and  a  breach  of  ethics  to  sell 
an  article  at  a  price  which  did  not  bear  its  full  share 
of  the  manufacturing  costs. 

Question 
Should  the  Stann  Company  have  marketed  the  new 
article  at  25  cents? 


Problem  152 
Price  Policy 

The  Heddon  Company  manufactures  a  patented 
machine  for  dispensing  gummed  tape  for  packages 
after  wrapping.  The  machine  is  of  a  type  having  no 
competitors  in  its  class  selling  for  less  than  $20, 
although  there  are  light  machines  selling  as  low  as  S5. 
On  the  basis  of  finish,  serviceability,  and  durability, 
the  company  feels  that  its  real  competitors  are  not 
the  cheap  machines  but  those  sold  by  two  or  three 
other  concerns  at  from  $20  to  $30. 

The  manufacturing  company  has  very  limited  capital. 
.It  is  necessary  to  establish  terms  which  involve  a 
minimum  of  risk.  The  following  schedule  of  prices  is 
proposed : 


SALES  POLICIES 


271 


No.  of 

Cost  of 

Cost  of 

Cost  of 

Cost  of 

Cost  of 

Cost  of 

machines 

machine, 

machine 

machine 

machine 

machine 

machine 

sold  at 

actual 

with 

to  the 

to  the 

to  the 

to  the 

the  one 

material , 

overhead 

general 

sub.   agt. 

dealer  & 

buyer  or 

time 

and  labor 

added 

agent 

salesman 

jobber 

consumer 

1 

$3.50 

$5.00 

$7.25 

$9.25 

$10.00 

$12.50 

10 

3.50 

5.00 

7.00 

9.00 

9.75 

12.00 

25 

3,50 

5.00 

6.90 

8.75 

9.50 

11.50 

50 

3.50 

5.00 

6.80 

8.50 

9 .  25 

11.00 

100 

3.50 

5.00 

6.70 

8.25 

9.00 

10.50 

200 

3.50 

5.00 

6.60 

8.00 

8.75 

10.00 

500 

3.50 

5.00 

6.50 

7 .  75 

8 .  50 

9.50 

The  above  prices  f.  o.  b.  Newark,  N.  J.  Terms — cash  with  order, 
5%;  2%  10  days  date  of  invoice.  Net  30  days.  After  30  days  2% 
per  month  interest. 

The  plan  is  to  sell  the  machines  through  general 
agents  in  particular  territories,  who  in  turn  sell  to 
sub-agents  working  with  dealers  in  their  respective 
territories.    The  plant  is  located  at  Newark,  N.  J. 

Questions 

1.  Is  the  price  schedule  to  be  recommended? 

2.  Are  the  quantity  discounts  justified? 


Problem  153 
Price  Level 

The  Southern  Oil  Trading  Company,  which  manu- 
factures a  cooking  compound  called  "Snowdrift," 
issued  under  date  of  June  7,  1921,  a  selling  price  allow- 
ing jobbers  a  10%  discount  and  .5%  cash  discount, 
also  proposing  that  in  order  to  make  the  jobbers' 
salesmen  familiar  with  selling  prices,  to  issue  such  pre- 
vailing price  lists  to  the  jobbers'  salesmen  direct. 

A  New  York  grocery  jobber,  who  was  one  of  those 
to  receive  a  copy  of  the  letter  sent  out,  protested  as 
follows : 


27L'        IMiOBLEMS  IN  SALES  MANAGEMENT 

^'oiir  policy  of  iiuii'keting  "Snowdrift"  has  boon  a  just 
one.  Tlu>  jol)l)ei-s  luivc  boon  nuiking  their  own  prices  and 
liave  been  receiving  a  profit  conunensurate  with  the  work 
they  have  been  doing.  Wm  have  now  changed  this.  A 
discount  of  lO'^^  will  not  pay  any  jobber  in  this  district  to 
handle  your  goods.  Our  expense  of  doing  business  is  well 
over  10%.  By  referring  to  tlie  Bureau  of  Business  Research 
of  Harvard  University  you  can  find  the  percentage  of  doing 
business  of  the  wholesale  grocery  trade  throughout  the 
entire  United  States  and  you  will  find  that  on  this  basis  the 
jobbers  cannot  handle  your  goods.  During  the  past  few 
years  we  have  develoi)e(l  a  considerable  l)usiness  on  "Snow- 
drift" and  have  enjoyed  for  ourselves  and  for  our  salesmen 
a  fair  profit,  but  on  the  basis  that  you  now  suggest  we  will 
have  to  discontinue  the  hantlling  of  "Snowdrift"  in  every 
wa}-. 

Questions 

1.  Is  this  protest  valid? 

2.  What  action  should  the  Southern  Oil  Trading 
Company  take? 


Problem  154 
Price  Policy 

A  company  manufacturing  a  metallic  filler,  which  is 
used  to  a  considerable  extent  in  the  manufacture  and 
repair  of  automotive  machinery  has  given  the  sale  of 
its  product  to  a  manufacturers'  agent  located  in 
Philadelphia.  This  manufacturers'  agent,  in  addition 
to  the  metallic  filler,  handles  a  crank-shaft  grinder  for 
which  the  apparently  well-founded  claim  is  made  that 
it  is  efficient  and  accurate  to  a  degree  not  ordinarily 
true  of  such  machines.  The  crank-shaft  grinder  costs 
the  manufacturers'  agent  S32.50  and  sells  to  the 
machine  shop  or  the  garage  at  $75.  The  metallic 
filler  is  sold  at  §5.50  per  pound;  the  cost  is  $1.50  per 


1 


SALES  POLICIES  273 

pound,  but  salesmen  working  on  a  commission  basis 
are  given  $1.75  per  pound  commission. 

The  manufacturer  has  found  that,  although  his 
product  is  of  unusual  quality,  sales  have  increased 
very  slowly. 

Questio7}s 

1.  Should  he  undertake  direct  sale  to  garage  and 
machine  shops  or  direct  to  wholesalers  of  supplies  and 
accessories  for  the  automotive  trade? 

2.  Is  the  price  schedule  a  satisfactory  one? 


ProblexM  155 
Pricing  Discontinued  Parts  Made  to  Special  Order 

The  Adler  Jones  Company,  manufacturers  of  textile 
machinery,  carries  in  stock  a  supply  of  the  standard 
parts  of  its  machines.  These  are  used  both  in  assem- 
bling machines  and  in  filling  customers'  replacement 
orders  for  parts. 

During  the  early  part  of  1915,  the  engineers  of  the 
Adler  Jones  Company  changed  the  design  of  one  of 
the  standard  starting-lever  studs.  It  has  been  the 
custom  to  manufacture  this  stud  in  lots  of  5,000,  and 
to  sell  them  to  customers  for  replacement  purposes  at 
3  cents.  The  new  stud,  it  was  found,  if  manufactured 
in  lots  of  5,000,  could  also  be  sold  at  3  cents  apiece  and 
return  approximately  the  same  profit.  Accordingly  the 
manufacture  of  the  old  stud  was  discontinued,  and  the 
new  stud  was  listed  in  the  catalog  at  3  cents. 

The  stock  of  the  old  stud  was  consumed  by  February, 
1916.  On  March  10th  an  order  was  received  for  50 
of  the  old  studs.  A  lot  of  200  old  studs  was  made  up, 
and  the  cost  records  showed  that  these  studs  cost  the 
Company  123^  cents  to  manufacture. 


274        PROBLEMS  IN  SALES  MANAGEMENT 

Question 
Sliould  these  studs  huve  been  billed  to  the  custom- 
er at  123/2  cents  apiece,  or  at  3  cents,  the  old  selling 
price,  which  was  also  the  selling  price  of  the  new  stud? 


Problem  156 

Policy  of  Pricing  Special  Attachments  When 

FiLLiNc:  Replacement  Orders 

For  the  convenience  of  customers,  the  Falcona 
Manufacturing  Company  carries  a  supply  of  the  stand- 
ard attachments  of  its  machines  in  stock  so  that  re- 
placement orders  from  customers  can  be  rapidly  filled. 
It  happens,  however,  that  in  many  instances  at  least 
25%  of  the  attachments  on  each  machine  are  made  in 
accordance  with  the  individual  customer's  specifica- 
tions. These  special  attachments,  naturally,  are  not 
carried  in  stock,  and  when  any  one  of  them  is  needed  by 
a  customer,  a  special  manufacturing  order  must  be 
started  in  the  factory.  Since  they  must  be  put  through 
the  factory  as  individual  orders,  it  costs  more  to  pro- 
duce them  than  the  company's  standard  attachments 
which  are  manufactured  to  stock  in  large  quantities. 

When  billing  a  new^  machine  that  calls  for  a  special 
attachment,  it  has  been  the  custom  of  the  Falcona 
Manufacturing  Company  to  bill  the  special  attachment 
at  the  same  price  as  the  similar  standard  attachment  of 
the  company;  for  example,  a  special  attachment  cost- 
ing $18.50  to  manufacture  would  be  billed  to  the 
customer  at  $0,  which  is  the  price  of  a  similar  attach- 
ment that  the  company  has  already  standardized. 

Question 
Should  the  Falcona  Manufacturing  Company  charge 
customers  the  actual  manufacturing  cost  of  such  special 
attachments  when  made  for  replacement  orders,  or 
should  they  charge  the  price  quoted  for  a  similar 
attachment  which  the  company  has  standardized? 


SALES  POLICIES  275 

Problem  157 
Cash  Discount  Policy 

The  Davidson  Rubber  Company  manufactures  a 
line  of  druggists'  rubber  sundries,  which  it  sells  entirely 
through  large  wholesalers.  Its  terms  are  net  30  days, 
no  discount  being  granted  for  cash.  In  its  price  list  is 
the  following  statement: 

In  conformity  with  our  policy  of  impartial  fairness,  loss 
or  expense  due  to  failure  of  the  individual  account  to  comply 
with  the  terms  of  sale  will  be  provided  for  directly  in  our 
quotations  and  terms  to  such  account  and  will  not  be 
reflected  as  an  element  of  cost  in  our  list  prices. 

The  officials  of  the  company  believe  that,  in  figuring 
selling  prices,  the  loss  due  to  cash  discount  must  be  included. 
This  naturally  increases  the  selling  price  and  thus  lessens 
the  opportunity  to  offer  an  item  at  a  low  price.  Nor  does 
the  quick  payment  of  accounts,  due  to  the  cash  discount 
offer,  wholly  offset  the  sales  lost  due  to  a  seemingly  high 
price  on  the  item. 

We  allow  no  cash  discounts;  our  terms  are  net  30  days. 
As  a  matter  of  fact,  prices  are  predicated  on  a  cash  basis; 
but,  in  order  to  facilitate  the  business  on  a  cash  transaction, 
we  extend  credit  courtesy  of  30  days. 

Question 
Is  the  argument  against  the  cash  discount  generally 
applicable? 


Problem  158 
Cash  Discounts 

The  following  passage  occurs  in  a  letter  from  the 
sales  manager  of  a  concern  manufacturing  leather  belt- 
ing and  other  mechanical  leather  goods : 

Within  the  last  week  we  have  had  several  discussions 
here  on  a  problem  which  does  not  very  frequently  come  up 
and  upon  which  we  have  had  different  opinions  expressed 
by  thorough-going,  confident  business  men  of  long  experience. 
The  case  is  this : 


270        PROBLEMS  IN  SALES  MANAGEMENT 

A  custonuT  purchases  a  bill  of  goods,  which  are  sold  on 
terms  of  net  30  days,  1%  10  days  for  cash  payment.  He 
pays  his  bill  within  10  days,  dcdnciincj  the  1%  for  cash,  and 
upon  receivin}>;  and  insijccting  the  goods,  he  hnds  that  they 
are  not  suitable  for  the  work  for  which  they  were  intended. 
The  matter  is  reported  to  th(>  seller,  and  he  is  permitted  to 
return  the  goods  for  credit. 

Upon  receipt  of  the  goods  he  is  sent  a  credit  memoran- 
dum, showing  the  net  amount  of  the  original  invoice  less 
the  1%  (Unluction.  The  net  amount  shown  on  the  memo- 
randum being  exactly  that  which  he  paid  for  the  goods. 

On  receiving  the  memorandum  he  takes  exception  to 
the  1%  deduction,  insisting  that  in  the  purchase  of  the  goods 
there  are  two  separate  transactions  involved.  First  the 
purchase  of  the  goods  at  a  definite  price,  secondly  the 
banking  transaction  whereby  he  is  given  1%  for  the  use  of 
his  money  between  the  10th  day  from  date  of  invoice,  on 
which  day  the  right  to  make  a  cash  deduction  expires,  and 
the  3()th  day  from  date  of  invoice,  on  which  day  the  net 
amount  of  the  invoice  is  due. 

He,  therefore,  insists  that  the  seller  send  him  a  credit 
memorandum  for  the  gross  amount  of  the  invoice  as  origi- 
nally rendered;  in  other  w^ords,  he  wants  1%  more  returned 
to  him  than  he  actually  paid  for  the  goods  received. 

It  is  our  contention  that  in  this  case  the  buyer  is  wrong 
and  that  the  seller  is  under  obligation  to  return  just  exactly 
what  he  paid  for  the  goods  and  no  more. 

Question 
Is  the  opinion  of  the  sales  manager  correct? 


Problem  159 
Price  Policy  in  Falling  Market 

In  the  spring  of  1920  certain  manufacturers,  in  an 
endeavor  to  bring  the  price  level  back  to  nearer  normal, 
desired  to  reestablish  competitive  price  levels,  prices 
low  enough  to  awaken  consumer  interest.  During  the 
war  the  custom  of  publishing  prices  had  to  a  large 
extent  been  done  away  with,  and  consumers  in  many 


SALES  POLICIES  277 

cases  seemed  to  have  forgotten  what  the  old  standard 
prices  for  certain  branded  articles  were. 

When  the  standard  prices  were  again  published,  com- 
plaints came  from  retailers  in  large  numbers.  In  effect 
they  were  as  follows: 

(1)  You  pu])lish  retail  prices  in  your  advertising  and 
deprive  us  of  our  prerogative  of  naming  such  retail  prices 
as  we  see  fit  and  such  as  will  allow  us  sufficient  profit. 

(2)  When  you  publish  retail  prices  you  catch  us  with 
stock  on  hand.  We  are  forced  either  to  reduce  our  prices 
to  your  announced  level  and  lose  money  or  hold  them  up 
and  lose  trade. 

Question 

1.  Is  it  good  policy  for  the  manufacturer  to  advertise 
such  decline  before  dealers'  stocks  purchased  at  higher 
levels  are  exhausted? 

2.  What  answer  should  be  given  to  the  complaints 
of  retailers? 


Problem  160 
Reduction  of  Prices 

In  the  spring  of  1921  the  James  E.  Ward  Company, 
manufacturers  of  high-grade  candies,  sold  their  prod- 
uct, which  was  to  be  retailed  at  the  rate  of  $1.50  to 
$2,50  per  pound,  through  regular  distributors  estab- 
lished for  many  years.  It  appeared,  however,  that  the 
cuts  made  by  other  manufacturers  to  $1.25  and  $1 
per  pound  were  having  some  effect  upon  the  volume  of 
sales  of  the  Ward  Company.  Without  notice  to  the 
public  of  any  decline,  dealers  were  provided  with  13/2- 
pound  boxes  to  be  retailed  at  $1;  in  other  words,  a 
decline  of  more  than  50%.     At  the  same  time  a  com- 


278         PHOIU.KMS  IN  SALES  iMANAGEMENT 

petitor,  the  Ballard  C-hocolate  Company,  retailing 
chocolates  for  $1.25  per  pound,  sold  219-pound  boxes 
for  $1.50. 

Questions 

1.  What  steps  must  he  taken  by  these  manufacturers 
in  order  to  retain  dealer  good  will? 

2.  It  is  good  policy  to  sell  candy  under  companies' 
trade-marks  at  reduced  prices? 


Problem  161 
Sliding  Discounts 

The  Shepley  Company,  manufacturing  tractors  and 
other  agricultural  implements,  uses  the  following  price 
arrangement  for  its  XY  model  tractor: 

CASH 


Tractors 

Factory 

Dealers' 

Dealers' 

Dealers' 

Purchased 

List 

Discount 

Net  Prices 

Profits 

4  to    8  iiicl. 

S2.085. 

22^;; 

•SI,  626. 30 

.'?458.70 

9  to  16      " 

2,085. 

24^;; 

1,584.60 

500.40 

17  to  24      " 

2,085. 

2(V'[ 

1,542.90 

542.10 

25  to  32      " 

2,085. 

27';;, 

1,522.05 

562.95 

33  or  more 

2,085. 

28^:; 

1.501.20 

583.80 

TIME 

4  to    8  incl. 

*2,150. 

22' 

81,677.00 

S473.00 

9  to  16      " 

2,150. 

24'  ; 

1,634.00 

516.00 

17  to  24      " 

2,150. 

26'; 

1,591.00 

559.00 

25  to  32      " 

2,150. 

27', 

1,569.50 

580.50 

33  or  more 

2,150. 

28';;, 

1,548.00 

602.00 

Questions 

1.  What  are  the  advantages  and  disadvantages  of 
this  sliding  discount  scale? 

2.  Lender  what  conditions  is  such  a  plan  a  stimulus 
to  greater  sales? 


SALES  POLICIES  279 

Problem  162 
Trade  Discounts 

The  usual  practice  of  publishers  is  to  sell  books  to 
retail  booksellers  on  a  sUding  scale  of  discounts  ranging 
from  25%  on  a  single  copy  up  to  40%  or  more  on  100 
copies  of  one  title.  As  a  rule,  the  minimum  rate  is 
33|%.  Only  a  few  have  a  separate  discount  scale  for 
the  jobber.  Hence,  the  only  way  a  bona  fide  jobber 
can  make  a  profit  is  to  buy  in  large  quantities  and  sell 
in  small  quantities.  Since  the  dealer  can  get  just  as 
good  a  profit  as  the  jobber  any  time  he  wants  to  buy  the 
same  quantity,  there  is  a  strong  tendency  for  the  dealer 
to  buy  direct.  The  result  is  that  there  are  few  real 
jobbers  in  books,  probably  not  more  than  ten  or  a 
dozen  concerns  officially  recognized  by  publishers  as 
book  jobbers;  and,  with  two  or  three  exceptions,  these 
concerns  are  also  large  retailers. 

The  Robert  Carter  Press  uses  the  following  scale  of 
discounts: 

10%  on  special  publications;  carriage  prepaid. 

10%  on  law  case  books;  carriage  paid  bj^  dealer. 

15%  on  text-books;  carriage  paid  by  dealer. 

25%  on  1  to  4  copies  regular  publications;  carriage  paid 
by  dealer. 

333^%  on  5  to  24  copies  regular  publications;  carriage 
paid  by  dealer. 

333/^%  and  5%  on  25  to  99  copies. 

40%  on  100  or  more  copies. 

It  is  known  that  the  discounts  to  the  trade  average 
from  5%  to  8%  below  those  of  other  publishers.  The 
policy  of  the  company  has  been  against  the  granting 
of  any  discount  on  sales  to  libraries.  Sales  to  libraries 
have  been  very  small,  although  most  of  the  books 
published  by  the  concern  are  of  a  non-fictional  nature, 
and  it  is  estimated  that  libraries  purchase  10%  of  all 
the  non-fictional  works.  There  has  developed  a  prac- 
tice among  libraries  of  purchasing  through  large  jobbers 
or  agents,  who  make  a  specialty  of  the  library  business. 
The  reason  for  this  development  is  said  to  be  the  failure 
of  publishers  to  allow  discounts  to  libraries.      The  job- 


280        PROBLEMS  IN  SALES  MANAGEMENT 

bers  or  ap;onts  allow  lihnirios  a  discount  of  10  ])er  cent. 
In  dealing!;  with  thoni  the  libraries  (M'ononiize  in  account- 
ing cost,  because  they  deal  with  one  jobber  rather  than 
direct  with  many  publishers.  Also,  the  service  rendered 
b}'  these  agents  causes  them  to  be  preferred  to  some  ex- 
tent, because  buyers  can  visit  the  booksellers  in  the 
larger  cities,  buying  the  books  they  wish  and  obtaining 
innnediate  delivery.  It  is  said  that  these  advantages 
could  be  easily  offset  by  publishers  generally,  and  by 
the  Carter  Press  in  particular,  through  increasing  the 
discount  to  libraries  to  a  minimum  of  20%  off  list. 
Several  leading  publishers  have  recently  announced  the 
granting  of  as  large  a  discount  as  this. 

Questions 

1.  Would  it  be  good  policy  for  the  Press  to  grant  a 
discount  to  libraries? 

2.  To   W'hat    extent   would    a  discount  to  libraries 
tend  to  antagonize  retail  booksellers? 

3.  WTiat    change,    if    any,    should  be  made  in   the 
discount  rate  to  dealers? 


Problem  16.3 
JiiLMNc;  Goods  at  FicTiTiors  1'rices 

The  Leavitt  Manufacturing  Company  produces 
men's  and  women's  Goodyear  welts  and  turned  shoes. 
The  output  of  its  factories  is  approximately  6,000  pairs 
per  day.  The  company  sells  the  largest  percentage  of 
its  product  to  shoe  wholesalers.  The  balance  is  sold 
only  to  large  indi\'idual  buyers,  such  as  department 
stores  and  retail  shoe  chains.  The  wholesale  houses 
receive  a  standard  w^holesale  trade  discount  of  15%, 
which  is  based  on  12%  operating  expense  and  3%  profit 


SALES  POLICIES  281 

for  the  wholesaler.  The  company  has  standardized  the 
cash  discounts  which  it  offers  when  selling  direct  to  the 
large  individual  buyers  and  has  established  varying 
cash  discounts  for  the  different  grades  of  shoes  that  are 
made.  For  example,  Style  2135  is  manufactured  to 
net  the  company  $4.70.  This  price  includes  the  cost 
of  the  materials,  cost  of  manufacture,  and  the  com- 
pany's profits.  The  discount  given  on  this  style  when 
sold  direct  to  the  individual  buyers  is  6  per  cent. 
Thus  the  shoe  is  offered  at  $5,  or,  less  the  discount, 
$4.70.     The  dating  terms  are  30  days  net. 

Frequently  the  salesmen,  when  selling  to  depart- 
ment store  buyers,  have  been  told  that  it  is  necessary 
for  them  to  receive  a  cash  discount  of  10%,  as  their 
executives  require  them  to  obtain  a  10%  discount  on 
all  purchases.  The  salesmen  of  the  Leavitt  Manu- 
facturing Company  have  been  instructed  to  state  that 
their  6%  discount  is  standardized  and  to  tell  the  buyer 
that,  if  he  insists  upon  a  higher  discount,  they  are 
willing  to  change  the  billed  price  of  the  shoe  from  $5 
to  $5.25  if  a  10%  discount  is  required,  but  that  under 
no  consideration  will  the  Leavitt  Manufacturing  Com- 
pany sell  the  shoe  at  a  price  less  a  discount  that  would 
net  the  company  less  than  $4.70. 

Question 
Is  such  a  policy  of  arranging  a  fictitious  billing  price 
advisable  from  the  point  of  view  of  the  Leavitt  Manu- 
facturing Company? 


282        riiOliLKMS  IN  SALKS  MANAGEMENT 

Problem  164 
l*Hi('K  Policy 

The  Redinoiul  Tire  C'oinpaiiy,  nuuiufucturin^  a  line 
of  pneumatic  and  solid  automobile  tires  for  pleasure 
cars  and  trucks,  has  list  ))ricos  on  solid  tires  practically 
the  same  as  other  leading  makers.  The  discounts  given 
to  the  distributor  are  10,  10  and  10,  and  5%  cash  10th 
proximo.  In  addition,  they  have  an  extra  5%  rebate 
proi)Osition  operati\-e  on  a  $10,000  volume  net.  On 
reaching  this  figure,  a  credit  is  applied  to  the  customer's 
account  to  be  taken  out  in  new  goods.  Immediately, 
on  additional  business  the  extra  5%  becomes  operative 
in  addition  to  the  regular  distributor's  discount.  In 
other  words,  the  discount,  after  an  account  reaches  a 
$10,000  volume,  is  10,  10,  10  and  5,  and  5%  cash  10th 
proximo. 

The  sales  organization  of  the  company  is  directed  to 
exercise  caution  on  the  5%  rebate  proposition.  It 
must  not  be  used  promiscuously  and  must  be  used  only 
where  there  is  no  doubt  of  the  distributor's  ability  to 
give  a  minimum  of  $10,000  business  within  one  year. 
The  branch  managers  nmst  personally  approve  the 
rebate  before  it  is  offered.  The  organization  finds  that 
there  is  a  tendency  on  the  part  of  branch  managers  to 
grant  5%  rebate  even  where  the  requirements  have  not 
been  met.  Competition  has  been  very  severe,  and 
branch  managers  say  that  it  is  necessary  to  make  this 
concession. 

Question 

Assuming  that  conditions  are  as  asserted  by  branch 
managers,  should  the  Redmond  Company  change  its 
terms  so  as  to  conform,  or  permit  the  making  of  con- 
cessions when  necessary  to  secure  orders? 


SALES  POLICIES  283 

Problem  165 
Quantity  Discount 

Many  of  the  leading  biscuit  makers  sell  their  products 
on  a  quantity  discount  basis,  the  amount  of  the  discount 
depending  upon  the  money  value  of  the  orders  of  the 
customer  in  any  one  month.  For  example,  the 
quantity  discounts  of  the  Bacon  Company,  one  of  the 
largest  concerns  in  this  line,  run  as  follows: 

Purchases  amounting  to  $ 


15  receive 

5% 

50 

10 

100 

12^ 

150 

15 

1,000 

16 

2,000 

17 

3,000 

18 

4,000 

19 

5,000 

20 

There  are  occasionally  further  discounts  for  extremely 
large  quantities. 

The  Wason  Company,  an  independent  baking 
company  producing  a  high-quality  biscuit,  has  adopted 
the  plan  of  giving  in  every  case  a  quantity  discount 
which  is  somewhat  more  favorable  than  that  of  its 
main  competitors.  For  example,  where  the  Bacon 
Company  gives  5%  on  S15  monthly  purchases,  the 
Wason  Company  gives  5%  on  $10.  It  is  said  that  this 
change  gives  the  Wason  Company  a  considerable 
advantage,  particularly  in  the  very  small  neighborhood 
stores.  Furthermore,  the  Wason  Company  offers 
throughout  the  range  a  discount  schedule  which  is 
considerably  more  favorable  than  that  of  its  com- 
petitors, consequently  giving  the  salesmen  a  strong 
selling  point. 

The  Wason  Company,  upon  the  building  of  a  new 
factory,  accepted  a  contract  from  a  chain  of  200  stores 
to  supply  them  with  about  $400,000  of  biscuits  per 
year.  By  virtue  of  the  discounts  granted,  this  com- 
pany was  able  to  sell  certain  crackers,  which  it  featured 
in  advertisements,  at  retail  prices  less  than  the  prices 
paid    by    the    Davis    Wholesale    Grocery   Company, 


284      ph()hli<:ms  in  salms  management 

l()c;it(Ml  in  the  sain(>  city  us  the  chain  of  stores.  The 
president  of  this  wholesale  grocery  company,  Mr. 
Mullen,  has  written  a  letter  to  the  Wason  Company, 
calling!;  attt^ntion  to  the  fact  that  retail  prices  of  certain 
crackers  are  less  than  the  pi'ices  paid  by  the  wholesale 
company,  with  the  statement  that  unless  this  situation 
is  rectified  the  wholesale  company  will  be  compelled 
to  discontinue  handling  the  Wason  line.  At  the  same 
time,  letters  were  received  from  retailers  competing 
with  the  chain  stores  to  the  effect  that  they  could  not 
afford  to  sell  the  particular  cracker  advertised  and 
featured  by  this  chain  at  the  price  quoted,  asking  for 
adjustment  of  ])ric(^  levels,  and  threatening  to  discon- 
tinue handling  the  line  unless  something  were  done. 

Question 
Write  a  letter  to   the  president  of  the  wholesale 
grocery  company  giving  your  decision. 


Problem  166 
Quantity  Discount  vs.  Jobbers'  Discount 

The  Carton  Company  manufacturing  for  the  hard- 
ware trade  an  article  widely  advertised  and  backed  up 
by  an  efficient  sales  force,  found  that  in  the  period 
from  1916  to  1920  there  had  been  very  little  increase 
in  volume  of  sales.  A  study  of  records  and  reports 
of  salesmen  showed  that  dealers  had  a  tendency  to 
overstock  the  product.  Overstocking  the  product, 
which  is  seasonal  in  its  nature,  tended  to  cause  loss  of 
enthusiasm  and  good  will  and  loss  of  a  number  of  the 
best  customers  each  year.  The  records  showed  that 
comparatively  few  jobbers  were  actively  pushing  the 
article,  that  many  were  handling  it  not  at  all,  and  that 


SALES  POLICIES  285 

most  of  those  who  did  carried  minimum  stocks  merely 
to  satisfy  occasional  demands  of  customers.  The 
retailers  on  the  company's  customer  hst  were  for  the 
most  part  the  larger  retailers,  while  the  majority  of 
small  retailers  did  not  handle  the  article. 

The  sales  manager  claims  that  the  price  policy  of 
the  company  is  responsible  for  this  condition.  He 
states  that  the  plan,  which  consists  of  a  sliding  scale 
of  discounts  whereby  quantity  bought  determines  the 
price,  tends  to  induce  overstocking  and  discourage- 
ment of  the  small  dealer.  The  fact  that  no  distinction 
is  drawn  between  jobbers  and  retailers,  although 
jobbers  are  quite  active  in  this  field,  is  the  reason  for 
the  failure  of  jobbers  to  handle  the  article  and  bring 
it  before  their  customers. 

Question 
Is  revision  of  price  policy  likely  to  be  a  sufficient 
remedv? 


Problem  167 
Price  Guarantee 

The  following  statement  was  issued  by  the  secretary 
of  an  association  of  wholesale  grocers: 

Therefore,  it  seems  to  us  a  distinct  cleavage  should  be 
made  in  classifying  merchandise  which  is  or  is  not  guaranteed 
against  price  declines  and  our  way  of  looking  at  this  would  be: 

(1)  Where  the  value  of  the  raw  material  sold  is  a  very 
small  part  of  the  value  of  the  article  offered;  where  the  price 
is,  therefore,  one  which  is  entirely  a  matter  of  what  the 
manufacturer  cares  to  ask,  and  where  the  buyer  has  no 
market  to  guide  him,  the  price  ought  to  be  guaranteed  against 
decline  not  only  until  shipped,  but  until  sold. 

(2)  Where  there  is  a  distinct  market  which  governs  the 
raw  material;  where  the  Iniyer  has  every  chance  to  keep 
himself  posted  on  this  market ;  where  the  cost  of  the  manu- 
facturing is  small  and  easily  obtainable  by  the  buyer,  and 
where  he  has  an  equal  chance  with  the  seller  of  knowing 
what  the  by-products,  if  any,  are  bringing,  then  it  is  poor 


286        PROBLEMS  IN  SALES  MANAGEMENT 

business;  to  ^luiranlee  prices,  iind  very  disadvantageous  to 
the  wholesale  grocer,  as  it  discriminates  in  favor  of  the  poor 
buyer  to  the  detriment  of  the  buyer  who  studies  his  business. 

(3)  In  certain  unsettled  and  wild  markets  it  is  essential 
for  the  manufacturer  who  is  desirous  of  having  the  whole- 
salers carry  suflicient  floor  stock  of  his  merchandise,  and 
when  the  buyer's  best  judgment  tells  him  that  it  is  not  good 
business  to  carry  any  stock  at  all,  then  the  manufacturer 
who  desires  to  have  his  goods  on  the  wholesaler's  floors 
will  find  it  to  his  own  advantage  even  under  condition  two, 
to  guarantee  his  price  against  decline.  What  this  amounts 
to  is  merely  consigning  with  the  added  advantage  that  the 
manufacturer  gets  jKiid  for  the  consigned  stock  instead  of 
waiting  until  it  is  sold.  The  ])enefits  in  this  case  are  not 
to  the  buyer,  but  are  all  in  favor  of  the  seller. 

We,  therefore,  think  that  no  hard  and  fast  rule  can 
be  laid  down  that  all  goods  should  be  guaranteed  against 
decline  in  price,  but  that  the  question  of  the  character  of 
the  merchandise  and  the  situation  of  the  manufacturer 
should  be  the  governing  con-iderations.  Precedents  even 
should  not  be  considered,  as  all  precedents  are  made  to  be 
broken  some  time. 

Question 
Are  these  generalizations  soiuul? 


Problem  1G8 
Price  Guarantee 

At  a  meeting  of  the  American  Cotton  Manufacturers' 
Association,  it  was  proposed  that  the  custom  of  making 
contracts  for  delivery,  extending  over  a  long  period 
at  a  fixed  price,  be  discontinued  whenever  possible. 
The  president  said,  in  part: 

When  it  is  desirable  for  a  purchaser  to  protect  his  source 
of  sujiply  for  some  months  ahead,  let  the  mill  enter  into  an 
agreement  to  reserve  a  given  number  of  looms  or  spindles 
sufficient  to  produce  the  desired  amount  of  customers' 
requirements  at  an  agreed  differential  over  cotton.  Under 
this  arrangement  the  purchaser  would  be  assured  of  his 
cloth  or  yarn  and  the  mill  could  buy  in  the  cotton  and  fix 
the  price  on  an  agreed  day  during  month  preceding  month 


SALES  POLICIES  287 

of  delivery.  Likewise,  the  mill  would  be  assured  of  orders 
for  steady  operation  of  machinery  and  could  contract  for 
its  requirements  of  cotton  on  a  "call  basis" — the  cotton  to 
be  "called"  and  price  fixed  on  date  agreed  upon  with  the 
customer.  This  plan  of  buying  cotton  by  mills  ha^  become 
more  and  more  common  during  the  past  few  years. 

It  was  suggested  that,  since  it  had  proved  satisfac- 
tory to  cotton  merchants  and  mills,  a  similar  plan 
might  prove  satisfactory  for  the  sale  of  cotton  textiles. 

Questions 

1.  What  are  the  advantages  and  disadvantages  of 
this  plan  from  the  view-point  of  the  cotton  mill? 

2.  From  the  view-point  of  the  wholesaler? 


Problem  169 
Price  Guarantee 

During  declining  prices  in  1920,  much  public  atten- 
tion was  called  to  the  effects  of  the  practice  of  guaran- 
teeing prices  against  decline  in  various  lines,  when 
orders  were  taken  for  future  delivery.  The  Federal 
Trade  Commission  sent  a  questionnaire,  late  in  1919, 
to  those  interested  in  the  subject,  asking  representatives 
of  various  industries  to  express  their  opinions  upon 
the  question  of  guarantee  against  decline  in  price. 
Later,  hearings  were  held  and  a  digest  of  the  replies 
was  published.  Among  the  industries  in  which  there 
were  several  replies  favorable  to  price  guarantee  were 
agricultural  implements,  grocery  jobbing,  hardware 
wholesaling  and  manufacturing,  paint  and  varnish 
manufacturing,  and  paper  manufacturing.  Among 
those  represented  by  several  opposing  replies  were  the 
coffee,  extract,  and  spice  trade,  cordage  and  rope 
manufacturing,  cotton  goods  and  thread  manufactur- 


288        PROBLEMS  IN  SALES  MANAGEMENT 

iiip;,  iron  iind  stool  mjimifucturiiif!;,  kiiit-f!;()ods  inuiiufac- 
turing,  milling,  oil  and  i)(>trolouni.  Typical  replies 
may  be  quoted  to  show  Iho  difTerenee  in  opinion: 

A  inaiiufaoturor  of  agricultural  implements  says,  in 
substance: 

Much  ill  favor  of  this  custom,  as  believe  principle  as 
applied  to  undelivered  j^ortion  of  contracts,  such  as  steel 
bars,  etc.,  has  tendency  to  in-ure  regular  and  continued 
factory  operation,  also  gives  manufacturer  opportunity  to 
buy  on  much  less  fluctuating  market.  However,  it  should 
be  permissive  and  not  mandatory. 

.Vnothor  manufacturer  in  tho  same  line: 

Believe  guarantee  necessary  to  agricultural  implement 
industry.  Manufacturers'  storage  facilities  are  limited  to 
two  months'  output,  and  jobbers  will  not  buy  season's 
requirements  in  advance  without  guarantee.  Present  prac- 
tice permits  more  even  distribution  of  shipments.  Guaran- 
tees should  be  limited  to  following  conditions:  to  definite 
date,  immediately  preceding  farmer's  demand;  only  to 
declines  in  manufacturers'  own  price;  and  cover  only  goods 
on  hand  at  specified  date.  Sole  oljject  of  extending  guarantee 
should  be  to  bring  about  better  factory  operations  and  more 
even  spread  of  shipments. 

In  the  drug  trade,  members  of  the  National  Whole- 
sale Druggists'  Association  expressed  approval  for  the 
following  reasons: 

Encourages  jol)bers  to  carr>"  adequate  stocks,  stabilizes 
relations  between  manufacturer  and  jobber  and  assures 
more  continuous  operation  of  factories,  with  resultant 
steady  employment  of  labor.  Manufacturer  in  touch  with 
primary  markets  and  able  to  closely  estimate  future  con- 
ditions. Jobbers'  profit  too  small  to  permit  assumption 
of  possible  loss.  Approximately  70%  of  goods  handled  by 
wholesale  druggists  subject  to  price  fixed  by  manufacturer. 
Practice  is  aid  to  manufacturer  in  providing  complete  and 
quick  distribution  to  consuming  market.  Do  not  believe 
guarantee  results  in  higher  prices.  In  cases  of  epidemic, 
if  insufficient  stocks  in  hands  of  jobbers,  abnormal  demand 
quickly  drives  up  prices. 

Grocery  jobbers: 

To  abandon  policy  would  lessenj  car-lot  shipments, 
adding  cost  to  consumer  and  would  eliminate  cooperative 


SALES  POLICIES  289 

plan  by  which  manufacturer  has  free  use  jobber's  floor  space 
in  exchange  for  guarantee,  adding  to  manufacturer's  cost, 
paid  by  consumer.  Large  dealers  in  season  of  plenty  would 
stock  on  speculative  basis,  taking  advantage  of  markets  as 
they  advance.  Small  dealers  at  a  disadvantage  with  firms 
of  large  resources  unless  price  guaranteed  to  all.  Loss 
dealers  sustain  without  guarantee  made  up  in  some  other 
way  and  consumer  pays.  Present  plan  affords  consumer 
supply  at  correct  prices;  also  affords  carriers  even  freight 
movement.  To  prohibit  guarantee  would  congest  stocks 
at  manufacturing  plants. 

Practice  applies  chiefly  to  proprietary  or  much-adver- 
tised brands  of  foods,  which  assures  adequate  stock  in  hands 
of  distributors,  on  which  the  distributor  and  retailer  make 
smallest  profits,  a  profit  established  by  the  manufacturer 
or  by  keen  competition.  Retailers  usually  operate  with 
limited  capital  and  the  obligation  is  imposed  upon  jobber 
to  keep  sufficient  stock  for  quick  demand,  entitling  him  to 
guarantee  against  decline  in  price.  Distance  of  jobbing 
centers  from  manufacturing  regions  additional  reason  for 
distributors  carrying  heavy  stocks.  Guarantee  prevents 
losses  otherwise  occurring  in  wholesale  jobbers'  trade.  Do 
not  believe  practice  operates  to  disadvantage  of  small 
manufacturer. 

A  manufacturer  of  metal  wheels  receives  and  dis- 
penses guarantee  privilege;  guarantee  relates  only  to 
unshipped  goods;  disapproves  of  guarantee  on  goods 
shipped  unless  shipped  on  consignment;  does  not 
believe  custom  demoralizes  trade,  but  permits  jobber 
to  meet  competition  when  price  decline  sets  in. 

Among  the  opinions  opposing  price  guarantee  were 
the  following: 

A  New  Orleans  coffee  jobber: 

Actual  experience  mkny  years  guaranteeing  against  our 
own  advance  or  against  decline  (60  to  90  days)  to  cover 
period  date  of  sale  to  date  of  shipment,  have  observed  great 
abuse  and  sustained  substantial  losses.  To  cite  specific 
case:  April  and  May  1919,  when  coffees  were  undergoing 
substantial  advances,  had  60  and  90  day  contracts  out- 
standing and  sustained  in  June  1919,  operations  net  deficit 
of  $7,988.  During  July  and  August  1919,  market  declined 
rapidly.  Submit  that  this  policy  one  of  the  most  abominable 
and  expensive  customs  in  merchandising.  July  1919  with- 
drew 60  and  90  day  and  substituted  30  day  guarantee.     One 


2*M)        PHOliLKMS  IN  SALKS  MANACJEMENT 

customer  offered  contnu-t  for  1920  requirements  at  fixed 
price.  We  (lecliued  their  business  on  such  basis.  Practice 
leads  to  overstocking  on  roasted  coffee. 

A  larp;o  cordage  niunufactiirer  ))elioves  the  provision 
unfair  and  unjust  to  manufacturer  and  expresses  opin- 
ion that  so-calletl  "contracts"  are  merely  options  to 
jobbers  and  carry  no  advantage  to  manufacturer,  be- 
cause manufacturer  does  not  execute  and  live  up  to 
real  contracts  for  raw  materials. 

A  southern  cotton  iiiill: 

Believe  guarantee  unsound  and  unreasonable.  It  is  a 
one-sided  contract.  We  bu}'  raw  materials  in  markets 
subject  to  fluctuation  and  see  no  reason  for  granting  our 
customers  such  favors. 

A  New  York  City  food  manufacturer: 

Practice  fundamentally  unsound.  Would  inject  specu- 
lative feature.  Contracts  for  raw  material  not  subject 
to  protection  against  decline.  If  we  guarantee  prices,  we 
assume  risk  and  find  ourselves  "Playing  the  market,"  with 
attendant  evils.  Have  found,  even  at  highei-  price,  jobbers 
give  business  to  those  who  guarantee  prices.  Under  guar- 
antee system,  jobber  assumes  no  risk;  encourages  him  to 
contract  for  more  than  legitimate  needs  in  anticipation  of 
speculative  profits.  Overbuying  puts  greater  quantity 
products  than  necessary  in  trade  channels.  Guaranteeing 
prices  means  expense  to  manufacturer,  same  as  other  costs 
of  selling,  and  consumer  pays  it.  W'lien  prices  raw  materials 
decline,  manufacturers  reluctant  to  recluce  prices  because 
of  contracts  at  higher  prices. 

A  hardware  jobber: 

Believe  that  custom,  if  practiced  universally,  would 
tend  to  inflate  prices  and  restrain  manufacturers  from  making 
reductions  while  guarantees  were  out.  However,  recognize 
that  under  existing  circumstances  it  is  necessar}'  to  guarantee 
prices  in  order  to  market  goods  for  entire  season. 

The  Bolt,  Nut  &  Rivet  Institute  expresses  the  belief 
that  such  guarantee  is  practically  option  given  to 
buyer  to  accept  or  reject  goods,  encourages  speculative 
buying  and  inflates  orders,  creating  artificial  prices; 
guarantee  beyond  date  of  shipment  is  vicious,  as  rebate 
in  most  cases  is  really  additional  profit.     Such  form  of 


SALES  POLICIES  291 

guarantee  does  not  prevail  in  bolt,  nut,  and  rivet 
industry.  Guarantee  effective  until  date  of  shipment 
is  practiced  in  this  industry  and  is  not  regarded  as 
being  so  pernicious,  although  it  does  introduce  a 
speculative  element  in  business.  The  Institute  would 
welcome  the  abolition  of  this  practice;  not  believed 
that  reform  can  be  brought  about  within  the  trade. 
An  association  of  tin  plate  manufacturers: 

After  thorough  discussion,  officers  of  this  association 
instructed  that  it  is  the  firm  conviction  of  its  members  that 
practice  is  vicious  and  detrimental.  No  good  reason  why 
manufacturer  should  assume  further  responsibility  after 
making  sale  in  good  faith  and  on  acceptable  terms.  Practice 
is  inimical  to  best  interest  of  those  willing  to  back  business 
judgment  with  their  own  money.  It  places  premium  upon 
ignorance,  inexperience,  and  incompetency,  and  encourages 
expansion  beyond  financial  resources.  Believe  it  encourages 
newcomers  to  attain  in  brief  time  position  it  has  taken 
others  years  to  attain. 

The  National  Machine  Tool  Builders: 

Following  the  armistice,  fearing  disturbed  business  con- 
ditions some  jobbers  could  not  be  encouraged  to  buy  without 
guarantee,  which  did  not  extend  beyond  six  months.  Prac- 
tice is  now  not  followed  in  this  trade  and  is  not  believed  to 
be  good  business. 

Questions 

1.  Should  a  shoe  manufacturer  guarantee  prices 
against  decline  when  selling  his  next  season's  line? 

2.  Should  a  canner  guarantee  prices  when  selling 
through  brokers  to  wholesalers? 


P 


292        PROBLEMS  IN  SALKS  MANAGEMENT 

Problem  170 
Uniform  Puke  Policy 

A  \vli()l('sal(>  grocery  is  placing  a  new  man  in  a 
territory,  wliich  has  been  worked  by  Mr.  Smith, 
recently  resigned.  On  the  first  day,  Mr.  Moore,  the 
new  man,  reported  that  Smith  had  gotten  most  of  his 
business  by  offering  special  discounts,  which  were  to 
be  j)aid  out  of  his  own  pocket;  these  ranged  all  the 
way  from  1  to  5  per  cent.  It  appeared  that  the  dis- 
counts which  had  been  promised  would  have  practically 
swallowed  his  salary  for  the  ensuing  month  had  he 
stayed  with  the  company  and  made  good  his  promises. 

The  company  had  known  that,  for  a  considerable 
period.  Smith's  business  was  being  secured  on  the 
basis  of  secret  discounts,  but  reasoned  that  he  was 
.selling  satisfactory  volume,  was  collecting  bills,  and 
that  the  company  was  not  concerned  further.  Never- 
theless, the  reports  of  the  new  salesman  showed  that 
the  territory  was  in  bad  shape  and  that  to  get  back 
upon  a  regular  and  profitable  basis  would  require 
considerable  time  and  effort.  This  was  important, 
particular!}^  because  the  wholesaler  specialized  in 
certain  private  brands,  on  which  for  many  years  he 
had  obtained  a  very  satisfactory  volume  of  business. 

The  sales  manager  feels  that  he  must  determine 
once  and  for  all  his  policy  toward  inside  discounts. 

Questiojis 

1.  Should  he  tolerate  such  discounts  when  known 
to  exist,  or  should  salesmen  be  discharged  if  it  becomes 
known  that  they  buy  business? 

2.  Should  salesmen  be  allowed  to  make  concessions 
in  prices  if  they  think  it  necessary  in  order  to  secure 
business? 


SALES  POLICIES  293 

Problem  171 
One-Price  Policy 

The  ciuestion  whether  or  not  to  maintain  a  one- 
price-to-all  policy  is  a  problem  which  faces  certain 
wholesale  grocers.  Many  retailers  feel  that  they  are 
getting  a  big  advantage  over  their  competitors  if  they 
are  able  to  beat  down  the  wholesaler's  price  a  few 
cents.  Certain  wholesalers  make  a  practice  of  raising 
their  prices  slightly  in  order  to  reduce  them  later  by 
apparently  permitting  the  retailer  to  get  the  better  of 
them  in  a  bargain. 

The  Machada  Wholesale  Grocery  Company,  of 
Brooklyn,  New  York,  sells  groceries,  bakery  goods  and 
meats  to  a  number  of  small  shops  operated  by  for- 
eigners in  the  lower  East  Side  district  of  New  York 
City,  As  these  shops  are  often  operated  on  extremely 
limited  capital,  credit  must  be  extended  by  the  whole- 
saler to  these  dealers;  but  many  of  these  foreigners 
are  governed  by  such  questionable  business  ethics 
that  the  credit  risk  in  dealing  with  them  is  very  great. 
It  is  not  uncommon  to  have  one  of  these  dealers  move 
away  suddenly  without  paying  his  bills.  To  guard 
against  losses  from  bad  debts  from  this  source,  the 
Machada  Grocery  Company  adopted  the  policy  of 
increasing  the  prices  to  these  dealers  in  order  that  even 
after  a  bargain  had  been  made  and  the  price  reduced 
slightly  from  the  original  quotation,  the  goods  would 
be  sold  at  a  price  slightly  higher  than  that  given  to 
American  storekeepers.  In  this  manner  a  fund  was 
gradually  built  up  from  the  excess  charges  against  the 
foreign  shopkeepers  in  order  to  insure  the  Machada 
Grocery  Company  against  losses  from  bad  debts  from 
this  source.  Thus  the  class  of  shopkeepers  respon- 
sible for  a  large  proportion  of  the  bad  debts  were  made 
to  bear  the  expenses  of  this  additional  credit  risk. 

Question 
Should  the  policy  be  continued? 


*j')i      ph()Hij:ms  i\  sali:s  maxa(;i;mi:xt 

Proulkm   17^2 

Price-Cutting 

Sonu^  iiuinufacturors  of  toilet  accessories  make  a 
practice  of  selling  at  fixed  prices,  irrespective  of 
quantity,  and  endeavor  through  legitimate  means  to 
keep  retail  prices  at  a  fixed  level.  On  the  other  hand, 
most  manufacturers  of  such  ])roducts  will  give  ([uantity 
price  for  a  purchase  of,  say,  five  gross  of  the  product, 
varying  from  10%  to  20';'{)  off  the  single-dozen  price. 
A  manufacturer  with  limited  resources  is  always  con- 
fronted with  the  problem  of  policy  with  respect  to 
quantity  prices.  If  he  makes  concessions  for  larger 
purchases,  he  immediately  gives  an  inducement  to 
chain  groceries  and  druggists  to  handle  the  product; 
and,  with  their  price  policies,  the  possibility  of  cutting 
prices  in  competition  with  other  types  of  dealers  is 
always  present.  A  common  view-point  of  manufac- 
turers of  widely  advertised  articles  is  expressed  in  the 
following  letter  from  a  company  producing  a  na- 
tionally advertised  toilet  soap.  The  manufacturer 
was  asked  his  opinion  regarding  price-cutting,  which 
was  carried  on  by  several  drug  and  chain-stores  in 
a  large  city. 

Price-cutting  is  an  evil  to  which  all  successful  advertised 
products  are  subject.  It  is  a  compliinent  to  a  product  to 
have  it  used  as  a  leader  by  department  stores  and  large 
dealers,  since  it  shows  that  they  consider  the  product  as 
possessing  great  pulling  power.  It,  however,  injures  the 
product  in  the  eyes  of  the  public  and  it  also  injures  the 
article  as  far  as  other  dealers  in  a  community  are  concerned. 

When  large  department  stores  cut  the  price  of  a  product, 
it  is  extremely  hard  to  keep  the  smaller  merchants  in  a  town 
in  a  friendly  attitude.  Probably  the  gro-;s  sales  of  an  article 
are  not  affected  by  price-cutting  in  a  town,  since  the  price- 
cutter  disposes  of  an  immense  amount  of  the  merchandise. 
Price-cutting  is  not  immaterial  from  our  point  of  view. 
We,  however,  have  to  make  the  best  of  it,  in  the  face  of  the 
fact  that  it  is  unlawful  for  a  manufacturer  to  try  to  maintain 
the  resale  prices  of  his  goods.  Until  such  time  as  the 
manufacturer  is  enabled  to  control  to  a  certain  degree  the 
resale  prices  of  his  j^roducts,  he  is  going  to  be  injured  by 
price-cutting. 


SALES  POLICIES  295 

On  the  other  hand,  through  refusing  to  sell  to  price- 
cutters,  the  concerns  selling  direct  to  retailers  are  able 
to  exercise  a  degree  of  control  over  price-cutting.  In 
the  controversy  concerning  price  maintenance  and 
price-cutting,  the  statement  is  sometimes  made  that 
quantity  discounts  and  maintenance  of  resale  prices 
are  inconsistent  policies  and  that  no  company  granting 
quantity  discounts  can  logically  establish  uniform 
resale  prices. 

Question 

Are  quantity  discounts  and  price  maintenance  in- 
consistent policies? 


Problem  173 
Price-Cutting — Discount  Policy 

In  the  rubber  tire  business  it  has  been  customary 
for  manufacturers  to  issue  customers'  and  dealers' 
price  lists.  The  dealers'  list  is  a  net  list,  except  for 
5%  discount  for  cash.  It  has  been  the  policy  of  the 
industry  as  a  whole  to  adhere  to  these  price  lists, 
except  for  jobbing  accounts  where  an  additional  jobbing 
discount  is  given.  The  Langley  Company  has  uni- 
formly adhered  to  such  a  policy.  During  the  recent 
period,  competition  has  been  very  keen  in  the  tire 
industry  and  the  larger  companies  have  had  a  very 
hard  struggle  to  maintain  their  percentages  of  total 
sales.  Very  recently  the  Langley  Company  has  learned 
that  several  of  the  larger  companies  have  been  favoring 
selected  accounts,  giving  them  an  extra  10%  discount. 
The  problem  has  been  put  up  to  the  new  management 
as  to  the  policies  to  be  adopted  to  meet  these  tactics. 

Questions 

1.  Should  the  sales  manager  give  the  extra  10%, 
a  volume  rebate  on  business  for  the  whole  year,  a 
volume  rebate  on  a  sliding  scale,  or  adhere  strictly  to 
list  prices? 

2.  What  would  be  the  result  of  the  application  of 
each  policy? 


296        PROBLEMS  IN  SALES  MANAGEMENT 

Problem  174 
Price  Maintknance 

The  (Icuenil  Chemical  Company  is  today  expending 
a  certain  portion  of  its  advertising  appropriation  for 
sales  and  advertising  service  through  the  retail  grocers 
themselves,  backed  by  the  Ryzon  Sales  Policy,  which 
is  stated  as  follows: 

Ryzon,  the  Perfect  l^akiii^  Powder,  is  priced  uniformly 
to  consumers  at  standard  prices  (juoted  on  invoices,  specified 
on  packap;es  and  advei'tised  to  consumers,  and  every  effort 
will  be  made  to  standardize  such  prices. 

Accordingly,  dealers  (whether  wholesalers  or  retailers) 
who  disregard  these  prices  will  not  be  used  as  distributors 
of  Ryzon. 

Rj'zon  is  guaranteed  to  give  satisfaction  to  consumers. 

The  sales  manager  of  the  company  makes  the  follow- 
ing statement  in  support  of  this  policy: 

(1)  The  manufacturer,  having  established  and  pub- 
lished a  uniform  price,  is  enabled  to  concentrate  upon 
problems  of  production,  to  make  the  most  satisfactory 
product  and  make  it  most  economically,  with  known  costs 
and  known  income. 

(2)  The  wholesaler  is  relieved  of  speculative  trading  and 
serves  and  is  served  by  being  free  to  develop  distribution 
along  economic  lines  of  fair  trading. 

(3)  The  retailer  is  afforded  a  fair,  uniform,  constant 
profit  for  the  service  he  renders,  based  on  the  movement 
of  the  goods  and  not  on  his  willingness  to  resort  to  over- 
stocking, price-cutting  or  other  uneconomic  practices. 

(4)  The  semi-wholesaler  (or  chain-store  dealer)  may 
handle  the  goods  on  terms  which  recognize  his  large  turnover 
and  economical  selling  methods,  and  yet  prevent  him  from 
undermining  the  trade  or  service  on  which  the  public 
depends  for  90%  of  its  supplies. 

(5)  The  consumer,  because  of  these  economies  in 
manufacturing  and  distribution,  may  be  supplied  with  a 
demonstrably  superior  product  at  a  uniform  price  which 
may  be  materially  lower  than  other  similar  less  efficient 
goods. 

Question 
Was  adoption  of  the  policy  justifiied  from  the  view- 
point of  manufacturer  and  wholesaler? 


SALES  POLICIES  297 

Problem  175 
Publicity  of  Price  Quotations 

Particularly  during  the  latter  part  of  the  war  and 
later,  considerable  publicity  was  given  to  prices  of 
percales  and  other  cloths  in  daily  newspapers.  Since 
such  prices  were  given  out,  the  National  Wholesale 
Dry  Goods  Association  advised  its  members  to  request 
percale  printers  to  name  list  prices  subject  to  trade 
discounts.  The  following  letter  was  sent  to  the 
converters  and  concerns  selling  percales : 

You  are  fully  aware  of  the  harm  done  to  retail  and  whole- 
sale distributing  trade  by  the  publication  in  the  daily 
newspapers  in  cities  throughout  the  country  of  the  mill 
prices  on  i^ercales  and  on  well  known  branded  lines  of 
bleached  goods. 

Therefore,  it  is  felt  that  if  the  distributing  trade  may 
have  the  cooperation  of  the  primary  market  factors  by  the 
naming  of  long  prices  with  discounts  it  will  secure  better 
distribution  under  more  satisfactory  conditions,  both  by 
wholesalers  and  retailers. 

You  understand  that  in  the  past  when  consumers  and 
retailers  saw  these  mill  prices  they  lost  sight  of  the  fact  that 
freight,  selling  expenses  and  warehouse  expenses  had  to  be 
paid  by  the  wholesaler,  and  they  felt  a  resentment  which 
was  not  warranted  by  the  facts. 

It  will  accordingly  be  appreciated  if  you  will  consider 
this  request  for  a  change  in  the  method  of  pricing,  and  we 
will  be  glad  to  know  whether  or  not  you  are  inclined  to  the 
opinion  that  the  plan  of  naming  a  gross  price,  less  trade 
discount,  on  percales  appeals  to  you  as  desirable. 

Secretary  Fernley  and  the  executive  committee  have 
been  at  work  on  the  matter  for  some  time.  One  of  the 
difficulties  in  the  way  of  naming  prices  on  a  long  basis,  when 
similar  cloths  go  to  the  cutting  and  jol^bing  trades,  is  that 
the  cutters  buy  on  a  net  basis  and  do  not  want  long  prices. 
Moreover,  it  is  questionable  in  some  instances  whether  the 
net  price  basis  does  not  satisfy  the  largest  consumers  of  the 
cloths. 

The  printers  have  no  prejudices  in  the  matter,  but  they 
say  that  even  when  they  refuse  to  give  out  prices  it  simply 
means  that  the  prices  are  secured  from  other  channels  and 
more  harm  than  good  results.  The  recent  publicity  given 
by  daily  newspapers  to  great  price  reductions  is  hardly 
likely  to  be  continued,  for  the  very  good  reason  that  minor 


21)8        I'KOHLI'IMS  IX  SALKS  MANAdKMKXT 

price  read.) list MU'nts  cetise  to  he  news,  and  do  not  appeal  to 
the  average  daily  newspaper  reader.  But  when  cuts  of  50 
per  cent  or  more  arc  made  all  the  facts  are  wanted  as  news. 

Tlic  garnioiit  tratios  prefer  the  ([uotation  of  prices 
on  a  net  basis.  The  printers  themselves  have  no  desire 
for  one  price  or  the  other,  so  they  claim,  hut  they  say 
that  it  is  impossible  to  keep  prices  secret  by  simply 
refusing  to  give  prices  to  the  press. 

Question 
What  should  be  the  attitude,  with  reference  to  this 
request,  of  the  officials  of  the  Longworth  and  Harrison 
Company,    sellers    and    converters    for    several    Fall 
River  mills? 


Problem  176 

Publicity  of  Costs 

Theodore  H.  Price,  at  a  session  of  the  convention  of 
the  National  Retail  Diy  Goods  Association,  proposed 
that  retail  prices  be  checked  periodically  with  whole- 
sale prices  and  the  percentage  of  mark-up,  including 
expenses  and  profit,  be  told  to  the  consumer.  A  sales 
check  which  bore  only  the  cost  of  the  merchandise, 
checked  to  reflect  the  market  in  the  wholesale  field, 
was  an  integral  part  of  the  proposal.  In  this  way,  he 
declared,  the  public  could  be  assured  that  they  were 
receiving  their  money's  worth  and  that  the  retailer 
was  passing  on  to  the  consumer  the  benefit  of  market 
changes. 

It  would  be  evident  that  my  suggestion  regarding  the 
sales  check  contemplates  a  candid  disclosure  to  both  your 
employees  and  customers  of  the  percentage  of  profit  you 
aim  to  make  and  the  cost  of  distributing  the  goods  in  which 
you  deal.  The  public  does  not  understand  what  it  costs 
to  conduct  a  retail  business  today.     They  compare  retail 


SALES  POLICIES  299 

prices  with  wholesale  prices,  conclude  that  the  difference 
is  profit,  and  are  angered.  I  think  you  owe  it  to  the  public 
and  to  yourself  to  make  it  plain  that  you  are  not  over- 
charging for  the  work  you  do  and  are  not  profiteering  in  the 
prices  you  ask,  because  they  must  include  not  only  the  cost 
of  the  goods  but  101  other  things  from  telephones  to  delivery 
wagons  which  are  necessary  in  the  conduct  of  an  up-to-date 
retail  establishment. 

Questions 
What  should  be  the  attitude  toward  such  a  proposal 

(a)  of  the  sales  manager  of  a  concern  producing 
a  grocery  staple; 

(b)  of  the  manufacturer  of  women's  trade-marked 
cloaks  and  suits? 


Problem  177 
Open  Price  Associations 

The    sales   manager   of    an    asbestos   brake    lining 
company  has  received  the  following  letter: 

Dear  Sir: 

At  a  recent  meeting  of  the  executive  committee  of 
the  Brake  Lining  Trade  Association,  much  interest  was 
displayed  in  a  proposition  to  form  an  open  price  asso- 
ciation, in  the  operation  of  which  we  shall  exchange 
prices  and  quotations  through  the  office  of  our  secretary. 
This  secretary  will  also  collect  statistics  of  production 
and  sales  and  make  them  available  for  use  at  regular 
intervals. 

The  plan  proposed  follows  very  closely  that  outlined 
by  Eddy  in  his  book,  "The  New  Competition."  Would 
you  take  the  trouble  to  look  over  that  book  and  give 
us  your  opinion  as  to  the  feasibility  of  such  an  associa- 
tion and  information  as  to  whether  you  would  be  willing 
to  join,  if  a  sufficient  number  of  concerns  could  be 
secured? 

Very  truly  yours, 


•M)o     pk()BL1':ms  in  sales  management 

The  Asbestos  Brake  Lining  (\)nij)jiny  is  one  of  a 
dozen  firms  manufacturing  aslx'stos  brake  linings  and 
fabrics.  It  advertises  its  product  extensively  under 
brands  which  are  now  well  known.  Its  prices  are 
usually  somewhat  higher  than  the  prices  for  unadver- 
tised  goods  of  a  similar  character,  but  it  makes  special 
effort  to  keep  the  quality  of  its  branded  products 
uniformly  high. 

Question 

What  answer  shoukl  he  make  to  the  letter? 


PUOBLEM    178 

Dkop-Shipment  Policy 

Manufacturing  concerns,  whose  goods  are  distributed 
through  jobbers  to  retailers,  frequently  undertake  to 
create  demand  with  retailers  by  means  of  advertising 
and  personal  solicitation  of  their  own  sales  forces.  It 
has  been  found  that  one  of  the  problems  connected 
with  the  introduction  of  food  or  other  specialties  is  the 
difficulty  of  getting  the  dealer  to  order  a  sufficient 
amount  to  give  him  more  than  a  perfunctory  interest 
in  pushing  the  product.  Consequently,  the  manufac- 
turers of  breakfast  food,  tobacco  concerns,  and  soap 
manufacturers  have  all  from  time  to  time  engaged  in 
the  practice  of  making  drop  shipments — meaning, 
usually,  the  shipment  of  a  specified  minimum  amount 
direct  from  the  factory  but  billed  through  the  jobber. 
This  means  that  the  jobber  takes  the  credit  risk  and  is 
compelled  to  handle  a  certain  amount  of  the  product 
to  fill  repeat  orders.  The  inducement  for  the  retailer 
is  usually  the  prepayment  of  transportation  charges 
by  the  manufacturer  and,  occasionally,  a  reduction  in 


SALES  POLICIES  30; 

price  or  an  offer  of  free  goods  amounting  to  a  reduction 
in  price.  From  the  view-point  of  the  manufacturer, 
the  drop  shipment  has  the  advantage  of  placing  his 
goods  upon  the  shelves  of  the  retailer  in  sufficient 
amounts  to  insure  the  interest  of  the  retailer  and  the 
satisfaction  of  consumer  demand  for  a  time. 

On  the  other  hand,  certain  jobbers  are  accustomed 
to  offer  a  special  discount  to  retailers  on  drop  ship- 
ments, justifying  their  practice  by  the  fact  that  there 
is  no  physical  handling  of  the  goods  and  that  their 
margin  is  sufficient  to  warrant  making  a  special  reduc- 
tion to  the  retailer.  From  the  view-point  of  the  jobber, 
there  is  much  complaint  that  the  specialty  salesmen 
of  the  manufacturing  concern  endeavor  to  influence 
the  retailer  to  place  his  order  through  this  or  that 
jobber,  not  allowing  orders  to  fall  as  they  might. 
Certain  other  abuses  have  also  developed. 

At  a  recent  meeting  of  the  National  Wholesale 
Grocers'  Association,  the  following  resolution  was 
framed  by  the  executive  committee: 

In  view  of  the  fact  that  grocery  products  move  to  a 
great  extent  from  the  manufacturer  to  the  wholesaler  at 
C  L(.  rates  of  freight,  it  would  in  most  cases  be  more  econom- 
ical to  make  drop  shipments  from  jobbers'  stocks;  and  to 
the  extent  that  economy  may  be  effected  by  such  shipments 
from  jobbers'  stocks,  the  executive  committee  of  the  National 
Wholesale  Grocers'  Association  recommends  that  drop 
shipments  be  made  from  jobbers'  stocks  because  factory 
shipments  necessarily  move  over  longer  hauls  at  the  L.  C.  L. 
rates. 

Question 
What  should  be  the  attitude  of  the  local  jobber 
toward  this  resolution? 


•M)2      iM{()HLi:.Ms  IX  sALKs  maxa(;i<:ment 

Phoulem   179 

(    UKDir    roLlCY-   -TkXTILK    MaNUI'ACTIUERS 

'Vhv  Dress  Fa])rics  Buyers'  Association,  at  a  meeting 
in  July  1920  ad()i)t('(l  tlic  following  resolutions: 

1.  In  view  of  tlie  fact  that  spriufj;  business  on  wool  dress 
fabrics  is  relatively  li^ht,  we,  as  buyers,  can  operate  more 
intellijj;ently  if  th(>  naniinf;  of  prices  for  spring  1922  is  deferred 
until  October  15. 

2.  Whereas,  we,  as  wholesalers,  and  in  co-operation  with 
our  retail  trade,  have  successfully  established  private  tickets 
on  certain  brands  of  fiinghani  and  other  fal)rics,  we  believe 
we  are  entitled  to  continue  the  use  of  these  tickets  and  should 
not  ])e  deprived  of  the  value  of  the  good  will  thereby  created. 

3.  In  order  to  put  all  wholesalers  on  a  competitive 
basis,  we  request  the  mills  and  selling  agents  to  sell  their 
product  f.  o.  b.  New  York  and  not  f.  o.  b.  mill  under  terms 
established  as  a  war  measure. 

4.  Whereas,  we  appreciate  the  co-operation  of  the 
manufacturer  in  naming  list  prices  on  ginghams,  we  believe 
he  is  entitled  to  have  those  schedules  immediately  reflected 
in  all  branches  of  the  industry  as  a  basis  of  true  value. 

5.  Whereas,  the  sale  of  ginghams  on  a  list  basis  has 
been  nuitually  satisfactory  to  wholesaler  and  retailer,  we 
believe  that  the  next  prices  on  percales  should  carry  discounts 
and  we  take  this  occasion  to  thank  the  mills  for  their  assur- 
ance of  co-operation  to  this  end. 

6.  Wliereas,  only  certain  factors  in  the  market  have 
complied  with  our  former  rc^cjuest  to  restore  spring  and  fall 
dating  on  seasonable'  merchandise,  we  do  hereby  re-empha- 
size the  importance  of  this  matter  to  the  wholesaler  and 
renew  our  request  that  all  mills  make  prcjvision  for  granting 
sea.son's  dating  when  naming  pri(;e. 

Question 

W^hat  should  be  the  position  of  the  selling  agents 
for  a  group  of  mills  manufacturing  various  cotton 
textiles  with  regard  to  the  various  resolutions? 


SALES  POLICIES  303 

Problem  180 
Policy  Regarding  Selling  on  Memorandum 

In  the  fall  of  1920,  after  the  flood  of '  cancelations 
had  subsided,  selling  houses  in  the  textile  trades  found 
themselves  with  large  stocks  for  which  no  customers 
could  be  secured,  because  of  the  inability  of  anyone 
to  foresee  the  extent  of  price  reductions. 

To  assist  many  customers  and  keep  goods  moving, 
several  of  the  largest  houses  have  adopted  the  policy 
of  placing  goods  on  memorandum.  This  immediately 
led  to  a  sharp  difference  of  opinion  as  to  the  wisdom 
of  pursuing  the  memorandum  policy  at  the  time. 
Some  houses  always  have  sold  in  that  way.  Others 
have  tried  the  policy  and  abandoned  it.  Some  have 
not  used  it  in  any  form  for  a  generation  or  more.  One 
of  the  large  houses  adopted  memorandum  selling  in 
sales  of  brown  and  bleached  cottons,  but  not  on  colored 
goods.  Some  stopped  short  at  bleached  cottons  and 
would  not  apply  it  to  percales  and  wash  fabrics. 
Selling  agents  for  eastern  mills  were  quicker  than 
others  to  adopt  it,  but  some  of  the  largest  eastern  con- 
cerns would  have  nothing  to  do  with  it  at  the  time. 

Those  who  have  adopted  the  policy  recently,  like- 
wise many  buyers,  look  upon  memorandum  sales  as  a 
necessary  act  of  cooperation  with  the  distributor  at 
a  time  of  grave  uncertainty  in  financial  and  merchan- 
dising markets.  Merely  naming  still  lower  prices,  it 
is  contended,  would  mean  a  further  slash  at  inventory 
values  without  giving  the  buyer  any  opportunity  to 
recover.  Under  the  practice  of  memorandum,  the 
title  to  the  goods  rests  in  the  seller  until  a  new  price  is 
named,  and  the  goods  sent  on  memorandum  are 
charged.  In  the  event  of  any  forced  liquidation  by 
the  buyer,  the  goods  shipped  will  not  become  a  part 
of  general  liabilities  and  any  money  received  for  them 
will  have  the  same  standing  as  any  sums  due  for 
consigned. 

Several  of  the  largest  eastern  manufacturers  are 
aggrieved  that  the  policy  became  general  at  this  time, 


304        PROBLEMS  JN  SALES  MANAGEMENT 

stntiiig  that  it  was  an  invitation  to  look  for  lower 
prices  just  as  long  as  the  goods  ordered  remained 
uncliarged.  Since  one  of  the  prime  purposes  of  the 
steep  reductions  in  ginghams,  percales  and  other  goods 
was  to  establish  a  hasis  of  value  for  a  definite  period, 
it  is  contended  that  the  nuMuo  policy  hurts  the  purpose 
of  constructive  acts  in  merchandising,  without  giving 
any  promise  of  stability  at  any  time  before  the  goods 
shipped  are  finally  priced. 

Question 
Was  selling  on  memorandum,  under  the  conditions 
prevailing  in  the  fall  of  1920,  good  policy? 


Problem  181 
Advertising  Appropriation 

Late  in  1920,  Printers'  Ink,  in  discussing  methods 
of  building  an  advertising  appropriation,  stated  that 
the  various  methods  commonly  followed  in  making  an 
advertising  appropriation  might  be  described  under 
11  headings  as  follows: 

(1)  Taking  out  an  insurance  policy,  in  the  form  of  adver- 
tising investment,  to  protect  a  company's  accumulated 
good  will. 

(2)  By  taking  a  certain  percentage  of  the  sales.  Some- 
times the  sales  figures  for  the  past  year  are  used,  and  in 
other  cases  the  anticipated  sales  for  the  coming  year  from 
the  basis  of  computation. 

(3)  By  an  assessment  on  a  certain  unit  of  the  product. 
Here,  also,  the  number  of  units  sold  in  the  previous  year  or 
the  numl^er  of  units  that  is  expected  to  be  sold  next  year,  may 
be  used. 

(4)  By  putting  all  the  money  that  can  possibly  be  ob- 
tained into  advertising  as  an  investment  in  future  sales.    This 


SALES  POLICIES  305 

is  a  demonstration  of  superior  faith  in  advertising  after  the 
principle  of  casting  bread  on  the  waters.  Often  the  invest- 
ment may  be  out  of  all  proportion  to  the  immediate  sales  or 
profits  of  the  business. 

(5)  The  budget  system. 

(6)  By  finding  out  how  much  advertising  it  takes  to  get 
a  new  user  or  a  new  dealer  for  a  given  product  and  then 
appropriating  enough  money  to  get  as  many  as  are  wanted 
that  year. 

(7)  By  investing  in  advertising  to  buy  inquiries  or  direct 
sales.     This  is  the  usual  mail-order  method. 

(8)  By  ascertaining  the  minimum  job  to  be  accomplished 
by  the  campaign,  and  then  deciding  on  the  mediums  and  the 
size  space  necessary  to  put  over  the  task. 

(9)  By  appropriating  a  certain  percentage  of  the  previous 
year's  profits. 

(10)  According  to  this  plan,  it  all  depends  on  what  com- 
petitors are  doing.  Watch  their  activities  and  then  set 
aside  enough  advertising  funds  to  go  them  one  better. 

(11)  A  plan  that  combines  the  percentage  of  sales  and 
the  budget  system.  A  definite  percentage  of  sales  is  unfail- 
ingly appropriated  each  year,  say  3%.  This  is  placed  in  an 
advertising  fund.  Then  an  advertising  budget  is  decided  on, 
which  is  taken  from  the  fund.  The  budget  varies  according 
to  the  exigencies  of  the  business.  It  may  be  more  than  the 
amount  derived  from  the  percentage  of  sales,  but  more  often 
it  is  less.  Where  it  is  less,  the  difference  piles  up  in  the  fund 
for  use  in  those  years  where  more  advertising  is  needed  than 
is  provided  by  the  current  assessment  on  sales. 

Questions 
What  method  would  be  suitable  for 

(a)  A  large  lumber  manufacturer; 

(6)   Mamifacturer  of  perfume  and  toilet  prepara- 
tions; 

(c)  Manufacturer  of  industrial  trucks  and  equip- 
ment; 

(d)  Cooperative  association  of  prune  growers; 

(e)  Mail-order  house; 

(/)  Manufacturer  of  valves,  pipes,  and  fittings; 
(gr)  Manufacturer  of  trade-marked  clothing; 
(/?)  Manufacturer  of  mechanical  toys? 


;^()(1        PKolUJaiS  IX  SALKS  MANAGEMENT 

Problem  18!^ 

Policy  of  Delivery  Dates  to  Two  Distinct  Types  of 

("rsTo.MKKs  Involving  Circulation 

The  Hilibjinl  and  White  Manufacturing  Company, 
(Mif>;u<2;(Hl  in  tli(>  nuiiiufiicture  of  textile  machinery,  has 
located  its  main  sales  oflice  at  the  factory.  This  com- 
pany, which  has  10  branch  sales  offices  in  the  eastern 
and  southern  textile  centers,  has  f2;ained  a  reputation 
throughout  the  country  of  always  delivering  on  the 
dates  promised  and  also  of  producing  finished  machines 
in  a  far  shorter  time  than  its  competitors.  The 
executives  are  particularly  proud  of  this  record, 
especially  as  50%  of  each  machine  that  is  ordered  by 
their  customers  is  built  in  accordance  with  special 
specifications  laid  down  by  their  customers.  This 
reputation  has  been  gained  through  the  coordination 
of  their  production  and  sales  departments,  through 
systematically  developing  the  execution  of  work  in  the 
factory  in  such  a  way  that  the  production  department 
sends  to  the  selling  organization  definite  schedules 
showing  delivery  dates  on  different  tj^^es  of  machines. 

In  1912  the  executives  of  the  Hibbard  and  White 
Manufacturing  Company  decided  to  make  their  own 
castings  and  control  this  part  of  the  raw  material. 
Accordingly,  a  foundry  was  built.  Because  of  the 
general  slump  in  the  industry  in  1914  their  sales  of 
machines  declined,  and  the  production  in  the  factory 
was  curtailed  25  per  cent.  At  this  time  the  superinten- 
dent of  the  foundry,  since  he  did  not  have  sufficient 
orders  to  run  full  time,  requested  the  executives  to 
grant  him  permission  to  make  contracts  with  outside 
firms  for  castings.  This  request  was  granted  and  the 
superintendent  made  several  long-time  contracts. 

During  the  early  part  of  1915  the  sales  of  machines 
came  back  to  normal  and  the  selling  organization  was 
convinced,  as  a  result  of  the  increase  of  orders  which 
they  had  received  from  many  manufacturers,  that  in 
a  short  period  they  would  be  able  to  secure  all  the 
business  that  they  could  handle.  When  the  produc- 
tion in  the  factorj-  returned  to  a   normal  basis,   the 


SALES  POLICIES  307 

foundry  superintendent  notified  the  production  depart- 
ment that  it  would  be  impossible  for  him  to  fill  their 
orders  for  castings  because  of  the  contracts  that  he 
had  with  outside  firms.  He  suggested  that  the  time 
for  manufacturing  the  various  lots  and  sizes  of  castings, 
which  had  previously  been  determined,  be  doubled. 
This  meant  that  whereas  prior  to  1915  the  company 
could  promise  delivery  of  a  machine  type  20,  for 
example,  in  three  to  four  weeks  from  the  time  an  order 
was  taken,  under  the  conditions  then  existing  the 
promised  delivery  date  would  have  to  be  extended  to 
eight  weeks. 

The  sales  manager  believed  it  essential  that  the 
company  continue  to  produce  machines  on  the  old 
schedule  and  avoid  being  placed  in  a  position  similar 
to  that  of  their  competitors,  who  did  not  make  ship- 
ment on  a  machine  for  eight  or  ten  weeks  after  the 
order  was  received. 

Question 
Should  this  company  cancel  the  foundry  contracts 
with  outside  firms  for  castings  or  increase  the  time 
allowed  for  delivery  dates? 


Problem  183 
Cancelations 

A  certain  large  sugar-refining  company  sold  to 
wholesalers  during  the  early  part  of  1920  a  large 
amount  of  sugar  at  prices  which  were  apparently 
justified  by  market  conditions  at  the  time  the  contracts 
were  signed.  Subsequently,  but  before  deliveries 
were  completed,  the  market  price  fell  to  less  than  one- 
half  its  former  level.     Many  buyers  under  contract 


:i08        Pl{()liLKMS  IN  SALES  MANAGEMENT 

made  rociuosts  for  cancelation;  invariably  the  refining 
compan}'  refused  to  accept  cancelation,  although  it 
made  some  concession  in  allowing  settlement  of 
halaiices  due  to  be  paid  on  the  instalment  plan  over 
a  period  of  90  days. 

(juesilion 
Do  you  consider  that  the  refusal  to  accept  cancela- 
tions was  tlie  pioper  policy  under  the  existing  con- 
ditions? 


Problem  18-t 

Policy  as  to  Cancelation  Clause  and  Requiring 

Signed  Orders 

The  credit  methods  committee  of  the  National 
Association  of  Credit  Men  has  made  a  report  recom- 
mending that  salesmen  should  be  given  the  following 
instructions  before  being  sent  out  to  solicit  orders. 

(1)  Get  the  order  sijiiiod  l\v  the  buyer  or  an  authorized 
agent . 

(2)  Order  forms  should  contain  a  cancelation  clause. 

(3)  If  the  terms  of  the  contract  are  set  forth  on  the  back 
of  order  J)lank  the  following  statement  should  appear  above 
the  signature  of  the  buyer:  "Please  ship  t lie  above  goods 
subject  to  the  terms  set  forth  f)n  the  reverse  side  of  this  order 
blank." 

The  report  urges  that  tlie  following  slogan  be  adopted  in 
an  effort  to  prevent  cancelations:  "Your  order  is  your  word 
of  honor.     Protect  it." 

Steps  will  be  taken  to  giv(>  the  slogan  widespread  publicity 
among  the  retailers. 


SALES  POLICIES  309 

Questions 

1.  Should  the  salesmen  of  the  American  Tobacco 
Company  be  given  such  instructions  if  they  were  sent 
out  to  introduce  a  new  brand  of  smoking  tobacco? 

2.  Is  enforcement  practical  for  the  Stamford 
Grocery  Company,  local  wholesale  grocers? 

3.  Should  a  Maine  canner  issue  such  instructions  in 
connection  with  his  sales  to  wholesalers  for  future 
delivery? 


Problem  185 
Policy  as  to  Claims  and  Adjustments 

The  Whitcomb  Tire  Company  offers  a  guarantee 
that  its  fabric  tires  will  render  6.000  miles  of  service 
and  its  cord  tires  8,000  miles.  The  salesmen  are 
instructed  neither  to  make  nor  suggest  adjustments  of 
this  guarantee.  When  the  question  is  brought  up 
to  them,  salesmen  are  instructed  to  refer  adjustments 
to  the  adjusting  department. 

The  adjusting  department  has  made  the  following 
rules : 

(1)  Tires  for  adjustment  must  be  shipped,  trans- 
portation prepaid,  to  factory  or  nearest  branch. 

(2)  Adjustment  will  be  made  on  basis  of  mileage 
unobtained  under  the  guarantee. 

(3)  No  adjustments  will  be  made  on  cases  which 
have  been  misused,  overloaded,  injured  by  accident, 
or  exposed  to  injurious  substances. 

As  compensation  for  handling  adjustments,  whole- 
salers are  allowed  a  merchandise  credit  equal  to  10% 
of  the  amount  of  the  adjustment. 

Question 
Is  this  adjustment  policy  conducive  to  development 
of  business? 


;-!10        I'UoiU.lvMS   l.\  SALi:S  MANAGEMENT 

I'UOULEM     18() 

Retukned  (joods  Policy 

I'lic  i.oNcll  ( Iroccry  Coniptiiiy,  oponitiiig  ii  wholesale 
grocery  couccni  in  southern  Indiana,  has  experienced 
0()nsi(l(>rahle  loss  throu<rh  returns  for  wliich  no  satis- 
factory cause  was  assigned.  Tlie  inanaf2;er  finds  upon 
examination  of  the  ([ucstion  that  ))olic'ies  regarding 
returned  goods  vary  among  grocery  concerns.  One 
lai'ge  wholesale  grocei\\'  company  concerning  which  in- 
formation has  come  to  him  informed  its  salesmen 
about  two  years  ago  that  they  would  not  jiermit  any 
merchandise  to  be  returned  without  hrst  giving  the 
kind  of  merchandise,  the  date  of  purchase,  and  the 
reason  for  wishing  to  return.  Upon  investigation  of 
complaint,  the  retailer  is  informed  that  he  is  author- 
ized to  return  the  goods,  if  the  opinion  of  the  officers 
of  the  company  is  that  he  is  entitled  to  an  adjustment. 
In  the  city,  drivers  have  positive  instructions  to  bring 
nothing  back  without  authorized  return  sheet  from  the 
office.  While  some  exceptions  are  made,  enforcement  of 
the  rule  has  reduced  unwarranted  returns  to  a  minimum. 

Another  makes  a  deduction  of  10*;^  for  handling 
charges,  covering  the  cost  of  return  of  goods  which 
have  been  returned  without  any  reason  for  which  the 
jobber  is  responsible.  The  jobber  naturally  expects 
to  make  good  if  goods  have  been  damaged  in  transit, 
spoiled  upon  receipt  or  within  the  usual  six  months" 
limit.  However,  upon  goods  for  which  there  is  no 
guarantee  of  sale,  the  goods  are  not  accepted  for  return. 
This  house  ])roposes,  further,  that  spoilt  canned  goods 
should  not  be  returned,  but  that  salesmen,  when  visit- 
ing customers,  should  hft  the  labels  w'hen  the  goods 
are  under  the  guarantee  period,  and  that  these  labels 
shall  constitute  proof  of  the  spoilage,  entitling  the 
merchant  to  deduction.  In  this  way,  the  freight  charges 
upon  spoilt  goods  are  avoided.* 

Question 
Which  of  the  two  plans  should  be  adopted? 

*B%dletin,  National  Wholesale  Grocers'  Associaiion,  May,  1921. 


PART  V 
SALES  METHODS 


PART  V 

SALES  METHODS 
OUTLINE 

A.  Selection  and  Management  of  Means  of  Selling. 

1.  Considerations  affecting  choice  of  selling  methods. 

2.  Personal  solicitation,  advertising,  correspondence 

as  means  of  effecting  sales. 

3.  Forms  and  amount  of  personal  solicitation  to  be 

used. 

(a)   "Regular"  salesmen. 

(h)  Special  types  of  salesmen  such  as  "mis- 
sionary'' salesmen,  specialty  salesmen, 
canvassers,  service  men. 

4.  Forms  and  amount  of  advertising  to  be  used. 

(a)   Area  to  be  covered. 

(h)    Media:    Periodicals,   newspapers,  house  or- 
gans, special  types. 
((•)    Appeals. 

5.  Correlation  of  advertising  personal  salesmanship 

and  correspondence. 

B.  Creation  of  Consumer  Demand. 

1.  Advertising  as  a  means  of  creating  consumer  de- 

mand. 

(a)  Use  of  advertising  by  manufacturer  of 
articles  sold  to  consumers. 

(6)  Use  of  advertising  to  create  consumer 
demand  by  manufacture  of  semi-manu- 
factured article  or  raw  material  ordinarily 
not  sold  to  ultimate  consumers  without 
further  manufacture. 

(c)    The  distribution  of  advertising  matter. 

2.  Personal  solicitation  of  retailers  or  consumers  by 

manufactureis'  representatives  when  product  is 
sold  through  middlemen. 

.313 


314 


rKOl^Li:MS   IX  SAl.E.-^  MA.NAUE.MKNT 


'^.  Samples  as  a  means  of  cicatiii^-  consumer  demand. 
As  an  aid  tosellin^i.     The  distrihution  of  samples. 

4.  (Jood  will  of  consumers.  Methods  of  creating 
and  retainiii"-  good  will.  Relation  of  good  will 
to  sales  elToits. 

C     Selection  ok   I  )isi  uiiiiToK.s  to  Handle  Product. 

1.  Selection  of  excjusixc  agents,  retail  or  wholesale. 

2.  Selection  of  dealei-s  who  are  not   gi\'en  exclusive 

agencies. 

D.  Sales  Contkact.s. 

1.  Contracts    with    exclusi\-e    dealeis,    jobbers    and 

retailers. 

2.  Contracts  with  wholesale  consumei's. 

3.  Contracts  invol\-ing  sales  of  raw  materials. 

E.  Cooperation  wrni   Dlstuibutors. 

1.  Methods    of    coopeiating    with    wholesalers      or 

jobbers. 

2.  Methods  of  cooperation  with  retailers. 

3.  Creating  and  manufactuiing  dealer  good  will. 

F.  Meeting  Competition. 

1.  Methods  of  meeting  com{)etition  of  competitors. 

Sales  strateg}'. 

2.  Meeting  competition  of  raw  products  or  substi- 

tutes. 

3.  Methods  of  meeting  competition  of  newer  types  of 

retailers,  who  engage  also  in  manufacturing  or 
wholesaling. 

G.  Handling  Inquiries. 

1.  Handling  gcnei-al  iiuiuiries  from  main  and  district 

office. 

2.  Follow-up  of  in([uiries  when  sales  are  made  direct. 

3.  Follow-up  of  inquiries  when  sales  are  made  through 

jobbers  and  for  retailers. 


H.     Handling  Cancelations,  Returned  Goods,  Claims 
AND  Complaints. 


SALES  METHODS  315 


GENERAL  QUESTIONS* 

A.  Selection  and  Management  of  Means  of 
Selling. 

In  introducing  a  new  product  or  developing  tlie  sales  of  a 
product  already  on  the  market,  shall  advertising  or  per- 
sonal solicitation  be  used  or  a  combination  of  the  two? 

What    forms    of    personal    solicitation    should    be    used? 

Should  regular  salesmen  be  employed  to  solicit  orders  from 
prospects?  Should  non-selling  or  missionary  salesmen  be 
employed  in  conjunction  with  regular  sales  or  as  a  means 
of  cooperation  with  distril)utors? 

What  forms  of  advertising  should  be  used?  Should  the 
advertising  be  local,  territorial,  or  national?  What  media 
should  be  used? 

Should  a  house  organ  l)e  used  as  a  means  of  advertising? 

Should  a  catalog  be  used?  If  so,  what  should  be  its  form 
and  how  should  it  be  prepared? 

How  can  personal  solicitation  and  advertising  be  combined 
to  produce  greatest  selling  efficiency?- 

B.  Creation  of  Consumer  Demand. 

Should  advertising  be  used  as  a  means  of  creating  con- 
sumer demand?  If  so,  how  should  selling  points  be  pre- 
sented? 

Is  it  advisable  for  a  manufacturer  whose  products  are  sold 
to  be  incorporated  in  other  manufactures  to  attempt  to 
create  consumer  demand  by  advertising  or  otherwise? 

When  selling  through  jobbers,  is  personal  solicitation  of 
retailers  through  manufacturers'  salesmen  profitable? 

When  should  samples  be  used  as  a  means  of  creating 
demand?     How  should  samples  be  distributed? 

(van  the  value  of  consumer  good  will  be  measured? 

C.  Selection  of  Distributors  to  Handle  the 
Product. 

How  shall  distributors  be  selected  by  concerns  which  have 
adopted  the  exclusive  agency  plan? 

Does  the  manufacturer  derive  advantage  from  advertising 
his  product  as  "sold  only  by  the  best  dealers"? 


;iJO        I'KOBLEMiS  IN  SALES  MANAGEMENT 

D.  Sales  Contracts. 

Under  wliut  coiulitioiis  is  it  a(-lvisal>lc'  to  use  sales  con- 
tracts? What  should  l)e  the  terms  of  an  exclusive  contract 
l)etween  a  manufacturer  and  his  retail  distributors? 

What  should  be  the  terms  of  a  contract  between  a  manu- 
facturer wliose  goods  are  sold  i)rimarily  through  dealers 
witli  a  large  consumer  to  wliom  the  company  sells  direct? 

What  should  be  embodied  in  the  contract  between  the 
producer  of  a  raw  material  for  manufactures  and  whole- 
sale consmners? 

E.  Cooperation  with  Distributors. 

How  can  the  manufacturer  cooperate  with  the  wholesalers 
through  whom  he  sells  to  secure  their  interest  in  pushing 
his  product? 

What  methods  may  be  used  to  inform  jobbers'  salesmen 
of  the  talking  points  of  the  manufacturer's  product? 

Under  what  conditions  is  it  necessary  and  advisable  for 
the  manufacturer  to  cooperate  with  dealers  in  selling  the 
product?     What  form  should  this  cooperation  assume? 

What  arrangements  should  be  made  to  induce  retailers  to 
advertise  a  product  locally?  When  is  it  advisable  to 
undertake  educational  woi'k  among  dealers?  How  can 
educational  work  be  carried  on  without  losing  dealer 
good  will? 

F.  Meeting  Competition. 

W^hat  plans  may  be  used  to  meet  the  competition  of  other 
manufacturers  in  the  same  line"' 

What  methods  may  be  used  to  meet  the  competition  of 
substitutes? 

Wliat  methods  ma}'  be  usetl  by  wholesalers  to  meet  the 
competition  of  the  newer  types  of  retailers? 

G.  Handling  Inquiries. 

How  should  general  inquiries  from  main  and  district  offices 
be  handled? 

How  should  inquiries  resulting  from  advertising,  when  sales 
are  made  direct,  be  followcnl  up? 

How  should  inquiries  resulting  from  advertising,  when  sales 
are  made  through  job])ers  and  retaileis,  be  handled? 


SALES  METHODS  317 

H.     Handling  Cancelations,  Returned  Goods, 
Claims  and  Complaints 

Under  what  conditions  should  exceptions  be  made  to  the 
general  policy  in  regard  to  handling  cancelations? 

How  should  returned  goods  be  handled? 

Who  should  be  responsible  for  the  handling  of  claims  and 
complaints?     What  procedure  should  be  adopted? 

Problem  187 
Introducing  a  New  Branded  Shoe 

The  Bray  ton,  Burleigh,  and  Stanwood  Corporation 
has  manufactured  shoes  in  Brockton  for  a  period  of 
22  years.  The  plant  has  a  daily  production  capacity 
of  2,400  pairs;  the  total  production  in  1920,  of  which 
35%  were  women's  shoes,  amounted  to  540,000  pairs. 
These  are  divided  up  among  the  two  principal  brands 
marketed  by  the  company,  called  the  Brayton  and 
Stanwood  brands,  and  the  private  and  unbranded  as 
follows: 


Braj^ton  Brand 

40% 

232,000  pairs 

Stanwood  Brand 

40% 

232,000      " 

Private  Brands 

15% 

87,000      " 

Unbranded 

5% 

29,000      " 

The  total  sales  for  1920  amounted  to  $4,435,600. 
The  Brayton  brand  of  shoes  is  the  same  as  the  Stan- 
wood brand  in  quality  and  style,  the  brand  name  having 
been  purchased  from  the  original  owners  a  few  years 
ago.  Prior  to  that  time,  it  had  been  on  the  market 
over  40  years.  The  \vomen's  shoes  are  of  standard, 
medium  grade,  little  attention  being  paid  to  any  except 
major   style   changes.      The   company    sells   shoes   to 

*Descriptioiis  of  methods  used  in  selling  are  to  be  found  in  almost  every 
business  and  trade  periodical  and  in  books  without  number,  but  there 
are  comparatively  few  eareful  analyses  of  sales  methods.  Students  are 
referred  to  J.  G.  Frederick,  Modern  Snk'sinniingeincnt,  D.  Appleton  and 
Company;  A.  W.  Siinw  Company,  Selling  Serica,  Organizing  for  In- 
creased Sales:  .J.  C.  Aspiey,  Modern  Sales  Monagenient  Practices, 
Dartnell  Corporation;  A.  W.  Douglas.  Traveling  Salesmanship,  Mae- 
millan;  A.  W.  Douglas,  Merchandising,  Maemillan:  C.  F.  Higham, 
Scienlific  Dislrihution,  London;  articles  in  Printers'  Ink,  Sales  Manage- 
ment, Sales  Maneiger,  Industrial  Management,  System,  Factohy, 
Advertising  and  Selling,  and  various  trade  journals. 


318        PKOBLKMS  IN  SALES  MANAGEMENT 


retailers,  pivinp;  exchisixc  ufiicncies  for  its  own  brands 
and  being  in  a  position  thereby  to  su])j)ly  two  retailers 
in  the  same  town.  Unbranded  shoes  and  shoes  under 
private  brands  are  Hkewise  sold  direct  to  retailers. 
The  advertising  of  the  company  is  limited  to  the  shoe 
trade  papers,  and  some  of  the  conventional  dealer 
helps,  such  as  window  and  counter  cards,  brand  tags 
and  blotters  whicli  ha\'e  been  distril)uted  to  retailers. 
The  company  employs  25  salesmen,  who  are  paid  a 
flat  rate  of  6%  on  sales.  Guarantees,  however,  at 
times  have  been  given  to  tide  salesmen  over  dull 
periods.  It  is  the  policy  of  the  company  to  hire  only 
experienced  shoe  salesmen  and  to  allow  these  to  operate 
on  their  own  initiati\e,  handling  the  trade  as  they  see 
fit.  No  distinct  sales  districts  have  been  organized 
and  as  a  consequence  there  is  considerable  overlapping 
of  salesmen's  territories.  Distribution  figures  by  sales 
districts  cannot  be  secured,  but  the  following  list  gives 
the  number  of  active  accounts  in  each  state: 


Albania 54 

Arizona 16 

Arkansas 60 

California 90 

Colorado 8 

Connecticut 22 

Delaware 

Dist.  of  Columbia 

Florida 30 

Georgia 88 

Idaho 8 

Illinois 220 

Indiana 14 

Iowa 4 

Kansas 6 

Kentucky 24 

Louisiana 70 

Maine 40 

Maryland 6 

Massachusetts  16 

Michigan 32 

Minnesota 30 

Mississippi 68 

Missouri 12 

Montana 16 


Nebraska 16 

Nevada 

New  Hampshire 12 

New  Jerse}' 38 

New  IMexico 10 

New  York 425 

North  Carolina 84 

North  Dakota 8 

Ohio 32 

Oklahoma 106 

Oregon 10 

Pennsvlvania 54 

Rhode  Island 4 

So.  Carolina 74 

So.  Dakota 12 

Tennessee 66 

Texas 300 

Utah 10 

\'ermont 8 

Virginia 36 

Washington 48 

West  ^'irginia 16 

Wisconsin 40 

Wyoming 


SALES  METHODS  319 

The  president  of  the  Brayton,  Burleigh  and  Stan- 
wood  Corporation  contemplates  introducing  a  new  line 
of  men's  high-grade  shoes  under  a  new  brand  name. 
This  is  to  be  added  to  the  medium-grade  lines.  A 
number  of  questions  arise. 

Questions 

1.  Is  the  time  opportune  for  introducing  a  new  line 
of  men's  shoes? 

2.  What  difficulties  will  be  encountered  in  establish- 
ing a  new  branded  shoe? 

3.  Assuming  that  it  is  decided  to  undertake  the 
introduction  of  the  line,  how  should  the  sales  manager 
go  about  preparing  the  campaign? 

4.  Should  the  regular  salesmen  be  used  to  introduce 
the  line? 

5.  Since  not  more  than  $20,000  is  available  for 
advertising,  what  media  should  be  used  and  to  whom 
should  the  appeal  be  made? 

6.  Since  neither  the  capacity  of  the  factory  nor  the 
resources  of  the  concern  permit  of  intensive  effort  over 
the  entire  United  States,  should  efforts  be  concentrated 
on  any  particular  territory? 

(a)  If  so,  where? 


•620        I'RUBLEAIS  IN  SALES  MANAGEMENT 

Problem  188 

Cokui:latin'(;  Advkutisixg  Campaign  with  Personal 

Salesmanship 

The  Walden  Company  manufactures  a  line  of  high- 
quality  work  garments  in  its  plants  located  in  central 
New  York.  In  1920  the  company  began  advertising 
on  an  extensive  scale,  using  the  bulk  of  its  appropria- 
tion of  $100,000  in  The  Sahirday  Evening  Post  to 
introduce  a  one-piece  garment,  aiming  to  create  con- 
sumer demand  as  a  means  of  influencing  retailers  to 
provide  proper  distribution. 

For  the  year  1921  the  advertising  campaign  plans 
were  as  follows: 

(1)  Extensive  newspaper  advertising,  17  full-page  inser- 
tions in  the  New  York  Journal,  Philadelphia  Ledger,  Boston 
Globe,  Baltimore  Sun,  St.  Louis  Post  Dispatch,  St.  Paul  Dis- 
patch, Pioneer  Press,  Chicago  News,  Portland  Journal,  Seattle 
Times,  Detroit  News,  Cleveland  Plain  Dealer,  Buffalo  News, 
and  Pittsburgh  Press;  13  full-page  insertions  during  the  year 
in  the  San  Francisco  E.raminer,  San  Francisco  ^Bulletin, 
Minneapolis  Tribune,  and  Minneapolis  Journal. 

(2)  Extensive  advertising  in  farm  papers;  63^-page 
insertions  in  the  Country  Gentleman;  six  3-column  insertions 
in  28  of  the  leading  farm  papers. 

(3)  Advertisements  of  children's  garments  in  the  May 
and  June  Woman's  Home  Companion,  Ladies'  Home  Journal, 
Delineator,  Good  Housekeeping. 

(4)  Advertisements  in  general  and  trade  publications; 
small  spaco  monthly  in  Popular  Mechanics;  six  full-page 
insertions  in  Accessory  and  (rarage  in  the  spring  and  fall; 
six  insertions  in  Automobile  Dealer  and  Repairer:  four  inser- 
tions fApril.  May,  SoptcMulxM',  and  OctohcM-)  in  Motor. 

The  advertising  plan  includes  also  the  following 
material  for  direct  advertising  to  dealers:  envelop- 
stufTers,  ox  10-inch  display  signs  for  dealers'  stores, 
posters  for  tacking  and  counter  signs  (two  grades), 
window  cards  in  four  designs,  reproductions  of  oil  paint- 
ings, small  cutouts  of  trade-mark.  Outdoor  advertis- 
ing is  provided  by  billboards  in  larger  cities.  The 
farm  paper  advertising  is  generally  concentrated  in 
]\larch,  April,  May,  August,  September,  and  October. 


I 


SALES  METHODS  321 

Questions 

1.  What  plans  should  the  sales  manager  make  to  be 
sure  that  the  house  gets  the  full  benefit  of  the  adver- 
tising campaign? 

2.  What  methods  may  be  adopted  for  developing 
cooperation  of  salesmen  in  distribution  of  advertising 
and  dealers'  helps? 


Problem  189 
Missionary  Salesmen 

The  Randolph  Saw  and  Tool  Company,  of  Baltimore, 
Maryland,  is  a  large  producer  of  saws  and  builders' 
tools.  The  company  is  an  old,  established  one,  and  its 
products  are  widely  distributed.  A  campaign  of  na- 
tional advertising  has  been  carried  on  for  a  number  of 
years,  both  in  general  periodicals  to  reach  consumers 
and  in  trade  periodicals  to  influence  dealers.  Most  of 
its  product  is  sold  to  hardware  jobbers  by  five  salesmen 
who  cover  the  entire  country. 

In  addition  to  the  salesmen  calling  upon  the  whole- 
sale trade,  the  company  maintains  a  force  of  twelve 
demonstrators  who  go  direct  to  the  retail  hardware 
stores.  These  men  take  orders  to  be  filled  by  the  whole- 
saler with  whom  the  retailer  wishes  to  do  business. 
The  order  is  made  out  in  three  copies,  one  copy  going 
to  the  retailer,  one  to  the  Baltimore  office,  and  the 
third  to  the  wholesaler.  These  missionary  salesmen 
give  especial  attention  to  the  new  lines  of  the  company 
and  to  those  which  the  jobbers  neglect. 

The  Bross  Hammer  and  Tool  Company,  located  in 
the  same  city,  manufactures  and  sells  lines,  with  the 
exception  of  a  few  items,  which  are  non-competing. 


322        PROBLEMS  IN  SALES  MANAGEMENT 

speciiiliziiig  on  hammers,  which  the  Randolph  Com- 
pany does  not  manufacture  at  alL  The  Bross  Com- 
pany, like  the  Rando]])h  Compan}^  has  conducted  a 
national  camixiign  of  advertising  in  general  periodicals 
and  trade  journals,  while  the  same  channels  of  distribu- 
tion are  used  in  marketing  its  products.  Similar  to 
Randolph,  the  Bross  Company  maintains  a  force  of 
missionary  salesmen,  but  their  method  of  working  is 
somewhat  different.  Instead  of  going  direct  to  the 
retailer  on  their  own  initiative,  the  force  of  from  seven 
to  ten  men  work  with  the  jobbers'  salesmen  in  calling 
upon  the  retail  trade,  thus  striving  to  aid  them  and 
arouse  in  them  an  enthusiasm  for  Bross  products, 
as  well  as  to  stimulate  the  retailer. 

The  sales  managers  of  the  two  companies  are  close 
friends  and  at  frequent  intervals  have  conferred  with 
the  thought  of  determining  which  practice  would  give 
the  best  results. 

Question 
What  are  the  arguments  for  each  method? 


Problem  190 
Pooling  Force  of  "Missionary"  Salesmen 

Although  many  manufacturers  of  identified  goods 
sell  through  jobbers  or  other  channels,  so  that  in  the 
ordinary  course  of  business  they  do  not  come  in  direct 
contact  with  the  retailer  who  reaches  the  consumer, 
yet  many  concerns  have  found  it  advisable  to  establish 
connections  with  the  retailer  in  various  ways.  Adver- 
tising is  commonly  used,  but  certain  concerns  make  it 
a  practice  to  have  salesmen,  often  called  "missionary" 
salesmen,  call  upon  retailers  at  intervals  in  order  to 


; 


SALES  METHODS  323 

push  the  goods  of  the  manufacturer,  which  will  ordi- 
narily receive  only  a  small  share  of  the  attention  of  the 
jobber  or  wholesaler.  Usually  orders  are  taken  and 
turned  over  to  the  jobber,  who  receives  his  margin 
upon  such  orders.  At  other  times,  the  representatives 
of  the  manufacturer  do  not  take  orders,  their  purpose 
being  solely  to  build  up  good  will  and  help  the  retailer 
move  the  goods  which  are  delivered  through  the  jobber. 

A  prominent  talking-machine  company  has  a  com- 
plete staff  of  representatives,  whose  work  is  of  good 
service  to  retail  agents.  These  phonographs  are  sold 
through  distributors  in  various  parts  of  the  country, 
who  maintain  traveling  salesmen  to  sell  to  the  retail 
dealers.  These  jobbers'  salesmen  call  upon  the  trade 
every  month.  The  manufacturer's  salesmen  call  upon 
the  trade  at  irregular  intervals.  Well-known  soap 
companies,  handling  advertised  brands,  have  made  it 
a  practice  to  sell  direct  to  the  retailer,  turning  the  orders 
over  to  jobbers  as  directed  by  the  retailer.  The  same 
plan  is  followed  by  tobacco  companies. 

It  is  claimed  that  the  use  of  salesmen  for  specialties 
is  wasteful,  and  a  plan  has  been  put  into  operation  in 
one  eastern  city  whereby  23  firms  cooperate  in  main- 
taining a  selling  force  to  cover  the  particular  terri- 
tory. The  company,  which  is  called  the  Co-opera- 
tive Sales  Company,  is  initiated  by  the  wholesale 
interests  for  the  purpose  of  pushing  advertised  grocery 
products  of  particular  companies.  The  objects  of  the 
Sales  Company  have  been  stated  as  follows: 

(1)  To  be  in  a  position  to  offer  manufacturers  a  large  and 
closely  controlled  selling  force  calling  on  the  retail  trade  at 
least  once  in  two  weeks,  and  more  often  once  a  week,  know- 
ing their  trade  better  than  anj^  other  salesman  can  know. 

(2)  To  do  business  only  with  loyal  manufacturers,  who 
are  ready  to  cooperate  to  an  extent  at  least  where  the  indi- 
vidual retail  grocer  can  compete  on  an  equal  basis  with  the 
chain  stores,  always  considering  whether  his  business  is  done 
for  cash  or  with  service.  To  support  wholeheartedly  such 
manufacturers. 

(3)  To  obtain  the  cooperation  of  wholesale  grocery  sales- 
men by  showing  them  a  line  of  different  kinds  of  merchandise 


:v2\      ruoHUvMs  in  sali-:s  managp:mp:nt 

wliich   carry   a   r{'as()ual)lc   profit    and   on   which   the   retail 
custonu'r  may  also  make  a  satisfactoiT  iiiaifiiii. 

(4)  To  obtain  thnnijih  tlu'  wholesale  p;roccry  salesmen 
the  interest  and  suppoi-t  of  tiie  i-etail  jrrocei-s  in  sales  company 
products. 

(5)  To  discourajie  missionary  work  on  merchandise  which 
has  lOOTf  distribution. 

Briefly  the  method  ol"  oix^niliou  of  the  Cooperative 
Sales  Coiupaiiy  is  as  follows: 

Any  wholesaler  in  the  territory  may  become  a  member 
of  the  company,  which  is  simply  a  purchasing  organi- 
ization  working  under  a  broker's  license.  It  makes 
arrangements  on  the  best  terms  it  can  with  one  manu- 
facturer of  each  type  of  grocery  product.  Since  nearly 
half  of  the  wholesalers  in  the  connnunity  are  buying 
through  the  company,  large  quantities  can  be  pur- 
chased at  any  one  time.  As  a  result,  quantity  discounts 
can  be  obtained  and  likewise,  such  a  brokerage  fee 
as  a  manufacturer  is  willing  to  give,  which  varies  from 
1%  to  10%.  All  discounts  retained  by  the  Sales 
Company  are  passed  on  to  the  buying  members,  the 
only  charge  being  1%  commission  to  defray  expenses 
of  ordering  and  billing.  Members  must  pay  for 
merchandise  within  seven  days  so  that  the  Sales  Com- 
pany can  take  advantage  of  cash  discounts. 

The  members  are  supposed  to  give  the  products  of 
those  manufacturers  who  sell  to  the  Sales  Company 
preference,  and  it  is  only  to  their  interest  to  do  so 
since  they  receive  such  favorable  terms.  Each  whole- 
saler must  of  necessity  carry  the  brands  of  competing 
manufacturers,  but  where  a  retailer  has  no  preference 
for  brands  the  goods  of  the  manufacturer  dealing  with 
the  Sales  Company  are  shipped.  Moreover,  the  whole- 
salers' sales  forces  are  instructed  to  recommend  the 
preferred  products. 

(a)  In  1920,  the  Rogers  Soap  Company,  of  Boston, 
which  manufactures  laundry  and  toilet  soaps  with  a 
national  distribution,  was  invited  by  the  Cooperative 
Sales  Company  to  give  up  missionary  sales  work  in  the 
territory  covered  by  the  Sales  Company  and  obtain  the 


SALES  METHODS  325 

special  representation  offered  by  that  company's 
members.  A  brokerage  fee  of  2%  was  asked  on  all 
purchases  made  by  the  Sales  Company  in  addition  to 
the  usual  quantity  discounts.  It  was  explained  at  the 
time  that  the  Cooperative  Sales  Company  represented 
in  its  membership  approximately  50%  of  the  whole- 
salers in  that  territor}^  The  methods  and  purposes 
were  outlined  as  above. 

Question 
What  should  have  been  the  action  of  the  manage- 
ment on  this  invitation? 


(b)  In  July,  1920,  the  president  of  the  Cooperative 
Sales  Company  approached  the  manager  of  the  Atwood 
Wholesale  Grocery  Company,  one  of  the  large  whole- 
salers of  the  district  who  had  not  entered  the  organiza- 
tion. He  was  asked  to  recommend  to  the  board  of 
directors  of  the  Atwood  Company  that  it  join  the 
Cooperative  Sales  Company.  Only  a  nominal  outlay 
of  capital  was  required. 

Question 
What  should  have  been  the  action  of  the  Atwood 
management  upon  this  invitation  to  join  the  organiza- 
tion. 


Problem  191 
Pooling  of  Sales  Forces 

Georgia  jobbers,  like  those  of  several  other  states, 
are  experiencing  much  annoyance  because  of  the  rapid 
development  of  chain  stores.  On  the  basis  of  experi- 
ence in  Baltimore,  Philadelphia,  Boston  and  other 
places  in  cooperation  among  grocery  houses  in  buying, 
warehousing,  and  sales  promotion,  they  have  expressed 


32(i        PHOBLF.MS  IN  SALES  MANAGEMENT 

their  opinion  that  the  only  answer  is  an  increase  in 
jobbing  efliciency  and  the  most  direct  way  to  produce 
this  is  tliroufih  the  poohng  of  purchasing  and  sales 
activities. 

In  Alacon,  for  instance,  are  nine  jobbers,  each  buying 
in  lots  calculated  to  meet  his  own  limited  output  and 
each  traveling  salesmen  throughout  the  same  retail 
field.  The  result  is  that  there  are  nine  warehouses  and 
nine  sets  of  salesmen,  whereas  in  a  territory  of  that  size 
one  common  stock  in  a  cooperative  warehouse  would 
be  sufficient  and  one  set  of  salesmen  adequate  to 
make  all  the  necessary  calls  for  the  retail  trade;  the 
net  result  being  a  reduction  of  overhead  that  would 
permit  lower  prices. 

Macon  wholesalers  think  that  this  is  not  only  true 
of  Macon,  but  also  of  broader  territory  throughout  the 
state.  According  to  their  plan,  they  would  not  only 
have  the  nine  houses  cooperate,  but  actually  merge, 
so  that  there  would  be  one  jobbing  house  functioning 
with  its  overhead  at  the  minimum. 

Questions 

1.  As  the  manager  of  a  wholesale  grocery,  would 
you  favor  pooling  sales  forces? 

2.  If  so,  on  what  conditions? 

3.  What  workable  arrangement  might  be  suggested? 


SALES  METHODS  327 

Problem  192 
Distributing  Flour 

The  Bingham  and  Wright  Company,  of  Dayton, 
Ohio,  operates  a  small  flour  mill  mth  a  daily  capacity 
of  500  barrels.  Freight  rates  shut  off  the  markets  to 
the  West;  but,  because  of  the  milling-in-transit  privilege, 
profitable  markets  to  the  east  of  Troy  extending  to 
the  coast  are  available  and  on  an  even  basis  with 
Kansas  City  and  Minneapolis  mills. 

Both  branded  and  unbranded  flour  is  sold  by  the 
company.  At  the  present  time  there  seems  to  be  no 
definite  policy  as  to  channels  of  distribution  or  adver- 
tising. Flour  is  sold  direct  to  large  consumers,  to 
retailers,  to  jobbers,  and  through  brokers,  as  orders  fall. 

Questions 

1.  Should  the  policy  of  selling  to  all  classes  of  buyers 
be  continued  indefinitely? 

(a)  If  so,  under  what  conditions? 

2.  What  would  be  the  best  way  to  introduce 
branded  flour  in  New  England  territory? 


Problem  193 
Demand  Creation 

The  National  Canners'  Association,  consisting  of  the 
majority  of  the  leading  canners  of  America,  has  adopted 
a  plan  to  inspect  and  certify  as  to  quality  all  canned 
goods  produced  by  manufacturers  who  are  willing  to 
pay  a  small  sum  per  case  for  such  service.  At  the  same 
time,  by  a  concerted  drive  on  the  billboards,  through 
the  newspapers  and  magazines,  together  with  special 
window  displays,  the  canners  intend  to  drive  home  the 
various  selling  points  of  goods  produced  by  their 
members. 

Question 

How  should  a  member  of  the  association,  a  canner  of 
vegetables  located  in  Maine,  tie  up  with  this  campaign? 


328        PHOBLKMS  IX  SALES  MANAGEMENT 

Problem  194 
Mailing-Lists 

Experience  shows  that  generally  the  salesman  who 
is  directed  to  leads  and  prospects  is  able  to  cut  down 
the  cost  of  soiling  iiiatorially  as  compared  to  the  sales- 
man who  makes  a  cold  canvass  without  any  particular 
leads. 

The  methods  of  securing  lists  of  prospective  pur- 
chasers vary  widely  from  enterprise  to  enteiprise;  in 
fact,  getting  a  prospect  develops,  particularly  in  times 
of  depression,  into  a  very  serious  problem  for  any 
concern  with  a  sales  problem  that  is  at  all  difficult. 
Press-clipping  bureaus  giving  news  of  fires,  promotions, 
births,  deaths,  business  expansion,  records  of  new  in- 
corporation, business  changes,  sifting  of  new  orders  and 
inquiries,  cooperation  with  salesmen  in  related  lines, 
cultivation  of  all  customers  to  secure  their  recom- 
mendation for  new  customers,  postal  inquiries  and 
questionnaires,  coupon  schemes  and  advertising,  trade 
and  general  directories,  building  reports  and  services 
are  among  the  many  sources  of  prospects. 

Questions 

1.  Suggest  methods  by  which  the  manufacturers 
of  the  following  may  secure  lists  of  prospective  pur- 
chasers to  whom  salesmen  might  be  sent: 

(a)  Breakfast  food. 

(b)  High-grade  perfume. 

(c)  Addressing  machines. 

(d)  Automatic  stokers. 

(e)  Graphite  electrodes  for  electric  furnaces. 
(/)  Business  fifing  equipment. 

(g)  Rolls-Royce  automobiles. 

2.  What  combination  of  ad^■ertising  and  personal 
salesmanship  would  be  most  effective  in  each  case 
for  developing  leads? 


SALES  METHODS  329 

Problem  195 
Distributing  Manufacturers'  Samples 

The  Burns  Company  formerly  made  it  a  point  to 
insert  an  offer  of  samples  in  all  its  advertising.  This 
was  discontinued  at  the  opening  of  the  war.  At  that 
time,  they  sold  a  small  size  to  the  Five  and  Ten  Cent 
Stores.  The  success  of  this  venture  gave  them  the 
idea  that  the  five  and  ten  cent  stores  should  be  con- 
sidered by  manufacturers  as  a  means  through  which 
samples  might  be  sold  and  distributed. 

Question 
Do  you  think  that  the  manufacturers  of  Polarine 
Automobile  Cup  Grease,  Burnett's  Vanilla,  or  Crane's 
or  Whiting's  Correspondence  Paper  should  adopt  this 
plan  of  reaching  the  public  with  samples? 


Problem  196 
Advertising  to  Remove  Price  Competition 

The  Dole  Company,  manufacturing  and  selling  art 
novelties,  chiefly  tinsel  merchandise  such  as  tinsel 
ribbon,  rope,  and  string,  and  Christmas-tree  decora- 
tions, as  a  rule  sets  the  price  upon  its  products  at  the 
beginning  of  the  year  for  the  whole  year.  In  the  recent 
period  of  fluctuating  prices,  the  wide  variations  in 
prices  of  materials  and  labor  raised  the  problem  of  a 
guarantee  of  price  to  customers.  The  company  has 
guaranteed  to  the  dealer  the  current  price  at  date  of 
shipment  and  has  even  gone  so  far  as  to  agree  to  meet 
the  prices  of  competitors.  As  orders  come  in  at  the 
early  part  of  the  year,  the  company  manufactures 
against  these  and  ships  to  the  customers  with  invoices 
post-dated.  No  uniform  post-date  custom  is  followed. 
Each  customer  is  treated  separately  and  the  company 
secures  the  earliest  post-date  payment  possible  from 


330        PROBLEMS  L\  SALES  MANAGEMENT 

each,  'llio  tonus  aiv  2'''(j  10  days  from  date  of  invoice, 
while  ail  anticipatory  discount  at  the  rate  of  8%  per 
year  before  the  tlate  of  invoice  is  allowed.  The  com- 
pany maintains  a  refj;ular  price  list,  from  which  dis- 
count is  allowed  to  jol)bers.  This  discount  will  also 
be  allowed  to  retailers  if  the  (juantity  of  business  they 
ha\'e  seems  to  justify  it.  'ilie  ^rantin<2;  of  such  discount 
is  left  largely  to  the  discretion  of  the  salesman,  although 
the  company  reserves  the  right  to  disavow  any  discount 
that  he  may  mak(>. 

Questions 

1.  Although  the  Dole  Company  has  an  estabhshed, 
trade-marked  line  and  TO^o  of  its  product  bears  the 
brand,  it  has  not  been  able  to  take  its  product  off  the 
price  basis. 

2.  Is  it  possible  for  the  company  to  become  inde- 
pendent of  price  competition  by  means  of  consumer 
advertising? 


Problem  197 
Selling  a  Higii-Pkiced  Household  x\.ppll\nce 

T'he  Hamilton  Beach  Carpet  Washer  Company 
manufactures  a  carpet-washing  machine,  the  purchase 
price  of  which  is  .$285.  The  company  realizes  that  this 
is  more  than  the  average  householder  can  afford  to 
pay  for  it. 

An  analysis  of  the  sales  field  showed  two  prospective 
buyers — the  home  and  the  institution.  The  home 
presented  a  discouraging  prospect;  first,  because  it  was 
a  field  of  such  tremendous  extent;  and,  secondly, 
because  so  few  homes  could  afford  to  purchase  it.  An 
investment  of  $285  in  an  article,  which  would  not  be 


SALES  METHODS  331 

used  more  than  once  a  month,  is  not  sound  economi- 
cally for  homes  of  average,  or  even  better  than  average, 
incomes.  On  the  other  hand,  the  institution  presented 
a  splendid  field,  but  a  limited  one. 

Question 
What  should  the  company  do  in  order  to  place  its 
product  upon  the  market? 


Problem  198 

Increase  of  Sales  Force 

The  Eldred  Food  Company,  manufacturing  a  line 
of  baked  goods,  biscuits  and  crackers,  has  recently  en- 
larged its  production  facilities.  The  sales  manager  says 
that  when  the  new  factory  was  built  no  immediate 
outlet  for  increased  production  was  allowed  for,  but 
that  present  demand  seems  to  justify  such  expansion. 
The  company's  market  during  1920  was  national  in 
scope,  the  bulk  of  sales,  however,  being  made  east  of 
the  Mississippi.  The  problem  now  confronting  the  sales 
manager  is  whether  to  increase  his  sales  efforts  in  all 
territories  through  the  addition  of  salesmen  or  to  con- 
centrate in  New  England,  adding  to  the  New  England 
sales  force  while  leaving  the  sales  forces  in  the  other 
territories  as  they  have  been.  It  is  proposed  that 
newspaper  advertising  be  used  in  large  cities  of  New 
England  to  supplement  the  efforts  of  salesmen,  pro- 
vided decision  is  made  to  concentrate. 

Question 
Which  plan  is  to  be  preferred? 


;W2        I'HOBLKMS  L\  SAI>KS  MAxNAGEMENT 

PUOHLKM    199 
SkcUUINc;    DlSTiiiliUTlON    TlIllOUGll    ^^11ULE.SALEUS    IN 

Competition  with  Private  Brands 

A  small  concern  engaged  in  roasting  coffee  secured 
fair  distribution  in  limited  territory  for  its  brand 
through  its  own  salesmen.  After  a  time,  examination 
of  his  accounts  forced  the  head  of  the  firm  to  the  con- 
clusion that  his  line  was  not  heavy  enough  to  justify 
maintaining  his  own  sales  force  to  approach  retailers 
direct. 

He  then  began  distributing  through  wholesale  houses. 
Each  jobl)er  j)ushes  a  i)rivate  l)rand  of  coffee,  apparent- 
ly to  the  detriment  of  this  roaster's  sales.  As  a  matter 
of  fact,  this  coffee  roaster  has  been  steadily  losing  in 
percentage  of  distribution  in  spite  of  consumer  adver- 
tising. His  conclusion  that  he  cannot  maintain  a  sales 
force  of  his  own  seems  to  be  sound.  Every  available 
wholesale  outlet  channel  is  clogged  by  private  brands. 

Questions 

1.  How  can  he  economically  get  and  hold  distribu- 
tion? 

2.  Would  a  modest  advertising  campaign  help? 

(a)  If  so,  what  media  should  be  used? 


Problem  200 
Selecting  Dealers 

In  the  distribution  of  many  lines  of  goods,  sales  man- 
agers feel  that  through  greater  efficiency,  greater 
volume  of  sales  and  increased  good  will  can  be  secured, 
by  careful  selection  of  dealers  rather  than  by  indis- 
criminate sales  to  dealers,  so  long  as  they  comply  with 
the  elementary  conditions  regarding  credit  risk  and 
pushing  of  product.  While  some  houses  sell  to  all 
retailers  who  choose  to  buy,  they  may  give  their  best 


SALES  METHODS  833 

cooperation,  in  other  words  work  hardest  to  secure  the 
continued  patronage,  of  one  or  two. 

For  instance,  a  very  large  jobbing  house  which  sells 
by  catalog  will  sell  to  any  type  of  dealer  of  sufficiently 
high  credit  standing.  At  the  same  time,  a  special  retail 
sales  service  is  offered  to  a  selected  list  of  customers, 
based  upon  the  reports  of  visitors  sent  out  by  the 
firm.  The  selected  dealer  in  each  town  may  not  be  the 
best,  but  he  is  always  one  with  whom  cooperation  will 
be  welcome  and  have  a  fair  chance  of  bringing  results. 
It  is  acknowledged  that  in  this  case  there  is  no  par- 
ticular prestige  attached  to  the  "best  stores"  idea. 
The  house  handles  and  sells  some  40,000  items  of 
merchandise. 

On  the  other  hand,  such  a  concern  as  Hart  Schaffner 
&  Marx,  with  its  advertised  line  of  men's  clothing,  or 
the  H.  Black  Company,  with  its  advertised  line  of 
women's  suits  and  cloaks,  must  adopt  somewhat  differ- 
ent bases  for  the  selection  of  representatives,  particu- 
larly since  they  have  chosen  the  policy  of  exclusive 
representation. 

It  is  obvious  that  at  any  one  time  it  would  be  impos- 
sible for  any  manufacturer  to  get  the  biggest  and  best 
retail  men's  clothing  or  retail  dry-goods  store  in  every 
town;  and  very  frequently  this  would  not  be  desirable, 
even  if  possible,  for  the  reason  that  the  leading  dealer 
in  each  town,  may  not  be  receptive  to  new  ideas. 
Consequently,  the  policy  has  been  adopted  with  the 
stores  to  which  they  have  given  representation  of 
endeavoring  to  build  them  into  high-class  stores,  so 
that  both  dealer  and  company  benefit  by  the  class  of 
the  store  in  the  community. 

Questions 

1.  What  plans  should  be  adopted  for  the  selection 
of  dealers  for  a  concern  manufacturing  a  widely 
advertised  kitchen  cabinet? 

2.  Prepare  an  instruction  sheet  for  the  salesmen  of 
a  Troy  collar  manufacturer,  which  can  be  used  as  the 
basis  for  the  selection  of  dealer  representatives. 


334        PROBLEMS  IN  SALES  MANAGEMENT 

Problem  201 
Building  Dealer  Organization 

The  Peerless  'i'ruck  Corporation  started  business 
seven  years  a{2;o.  Tlie  corporation  tried  for  a  while  to 
sell  its  trucks  through  the  regular  channels,  as  they  then 
existed,  but  found  that  these  methods  were  not  success- 
ful. Dealers  would  (contract  for,  say,  3{)()  trucks  to  be 
delivered  during  the  year;  they  would  sell,  perhaps,  10, 
When  the  company  approached  them  in  regard  to  ful- 
filling their  contracts,  they  refused  to  live  up  to  them. 

The  new  sales  manager  declares  that  the  truck 
corporation  should  build  up  its  ow^n  dealer  organization. 
The  prol)lem  Ijefore  the  company  is  to  build  an  organi- 
zation, but  there  is  a  ciuestion  as  to  whether  mechanical 
ability  and  knowledge  of  trucks  or  general  business  and 
selling  ability  shall  be  made  the  paramount  require- 
ment. It  is  proposed  to  select  the  branch  managers 
and  to  make  them  responsible  for  the  building  of  the 
sales  and  dealer  organizations  in  their  districts. 

Question 
Is  this  proposal  a  practical  one? 


Problem  202 
Developing  Good  Will 

A  wholesale  grocer  located  in  St.  Louis  is  at  the 
present  time  engaged  in  a  large  advertising  campaign 
by  which  he  is  doing  his  utmost  to  influence  the  con- 
sumer to  trade  with  his  neighborhood  grocer,  pointing 
out  to  the  consumer  in  the  best  way  he  can  the  impor- 
tance of  patronizing  the  local  grocer.  The  object  of  the 
wholesaler  is  to  do  all  that  is  possible  to  help  the  retail 
grocer  not  only  to  increase  his  sales,  but  also  to  protect 


SALES  METHODS  335 

himself  against  the  inroads  of  chain  stores.  The  whole- 
saler admits  he  finds  it  difficult  to  get  strong,  impressive 
arguments  to  use  in  his  campaign. 

Question 
Is  the  wholesaler  justified  in  carrying  on  such  an 
advertising  campaign  as  a  means  of  increasing  his  own 
sales  immediately  or  ultimately? 


Problem  203 
Developing  Good  Will  of  Distributors.    House  Organs 

The  Hoyt  Phonograph  Company  at  the  opening  of 
the  war  took  stock  of  its  distributing  organization  and 
found  that  its  product  was  sold  by  various  types  of 
stores,  ranging  from  recognized,  well-established  dealers 
to  barber  shops  and  irresponsible  dealers.  In  fact,  it 
seemed  that  any  dealer  or  anyone  who  had  the  $200 
or  $300  necessary  for  investment  in  a  machine  or  two 
could  secure  agency  and  carry  on  business  in  this 
particular  product.  The  contracts  with  the  dealers 
have  been  engineered  mainly  from  the  central  office  in 
New  York;  district  offices  have  had  little  to  do  with  the 
actual  making  of  contracts  with  dealers. 

It  was  felt  by  the  sales  manager,  when  this  was 
brought  to  his  attention,  that  the  prestige  of  the  Hoyt 
phonographs  was  being  injured  by  such  indiscriminate 
representation,  and  it  was  resolved  to  begin  a  process  of 
selection  which  would  bring  it  about  that  the  type  of 
dealer  would  add  rather  than  detract  from  the  prestige 
of  the  product.  Fortunately,  war  conditions  and  war 
prosperity  brought  about  a  very  great  increase  in  the 
demand  for  phonographs,  and  it  was  possible,  without 
immediate  loss  of  sales,  to  carry  out  this  process  of 
selection  by  the  simple  means  of  filling  orders  only  for 
those  dealers  whose  patronage  was  considered  desirable. 
While  this  was  being  done,  a  constant  campaign  of 
education  of  the  dealer  in  methods  of  selling,  in  window 


38ti        l»iU)liJ.KMS  L\  SALES  MANAGEMENT 

displays  and  methods  of  finding  prospects  was  carried 
on.  In  fact,  the  dealer  who  wanted  to  handle  these 
phonographs  was  compelled  to  be  "educated"  by  the 
company. 

(a)  Things  seemed  to  go  along  well  enough  until  the 
sudden  change  from  sellers'  to  buyers'  market.  Sales 
resistance  began  to  develoj)  rai)i(lly,  and  it  was  finally 
discovered  that  the  educational  program  had  not  been 
tactfully  handled,  that  the  dealer  was  willing  to  accept 
some  of  this  "education"  when  he  needed  the  goods 
badly,  but  resented  the  attitude  which  seemed  to  be 
implied  that  outsiders  knew  his  business  better  than 
he  himself  did. 

The  development  of  the  Ho3't  business  depends  in 
large  measure  upon  building  up  good  will  among 
dealers. 

Question 
What  should  the  sales  manager  do  in  order  to  accom- 
plish this  purpose,  while  still  retaining  the  essential 
features  of  the  educational  campaign? 


(6)  Up  to  this  time  the  Hoyt  Company  had  issued 
two  types  of  house  organs:  one,  which  went  to  sales- 
men; the  other,  an  internal  or  employee  paper. 

Question 
Could  either  of  these,  or  an  adaptation  of  them,  have 
been  used  to  advantage  in  the  plan  of  dealer  education? 


(c)  From  the  standpoint  of  physical  make-up,  house 
organs  may  be  classified  thus:  blotters,  newspapers, 
magazines,  booklets,  envelop  inclosures,  novelties. 


SALES  METHODS  337 

Question 
Provided  that  a  house  organ  was  to  be  sent  to  dealers, 
which  type  would  seem  under  the  circumstances  to  have 
been  best  suited  to  the  purposes  of  the  Hoyt  Company? 
What,  in  a  general  way,  should  have  been  included  in 
the  house  organ? 


Problem  204 

Retaining  Good  Will  of  Distributors  During 
Changes  in  Policy 

The  Hawkins  Company,  of  Milwaukee,  manufac- 
tures a  widely  advertised,  branded  work  shoe.  The 
company  decided,  late  in  1920,  to  sell  its  goods  direct  to 
consumers  in  competition  with  the  retailer.  In  accor- 
dance with  this  somewhat  radical  decision,  all  its  road 
salesmen  were  called  in  at  the  first  of  the  year  1921 
and  were  informed  that  their  services  were  no  longer 
required  as  salesmen.  Then  the  company  sent  letters 
to  its  14,000  retail  dealers,  telling  them  it  would  go 
after  the  local  market  itself  by  lowering  retail  prices  and 
taking  orders  direct  by  mail.  If,  under  these  circum- 
stances, the  dealer  still  wished  to  carry  the  company's 
shoes  in  stock,  the  company  would  sell  him  subject  to 
the  new  conditions.  It  developed  that  more  than 
8,000  retailers  accepted  the  company's  terms. 

The  decision  as  to  distribution  policy  is  said  to  have 
been  brought  about  by  the  flood  of  cancelations  from 
which  the  company  suffered,  in  common  with  most 
other  manufacturers,  in  the  latter  part  of  1920.  The 
company  felt  that  the  retailers  had  generally  not  been 
fair  to  the  company  in  attempting  to  throw  the  whole 
burden  of  readjustment  upon  the  manufacturer.  Five 
or  six  months  later,  the  officials  of  the  company  decided 
that  selling  by  catalog  involved  too  great  cost  per 


838       PROBLEMS  IN  SALES  MANAGEMENT 

inquiry  and  that  the  service  rendered  by  retailers  was 
worth  all  th(^  customers  were  asked  to  ])ay  for  it. 

The  company  now  ])lans  to  go  back  to  its  former  plan 
of  distributing  through  retailers,  although  it  has  under 
consid(M-ation  a  plan  for  forming  a  chain  of  shoe  stores 
in  towns  adjacent  to  Milwaukee. 

Questions 

1.  Write  two  letters  to  be  sent  to  the  retail  trade 
announcing  th(>  changes  in  policy;  the  first  announcing 
decision  to  sell  to  consumers;  the  second  announcing  the 
change  to  former  methods. 

2.  What  i)r()blems  are  involved  in  the  plan  of  estab- 
lishing a  chain  of  retail  stores? 


Problem  205 
Retaining  Good  Will  of  Dealers 

Many  manufacturers,  during  the  latter  part  of  1920, 
found  themselves  overwhelmed  with  cancelations  and 
returns  which  de\'eloped  stock  and  inventories  all  out 
of  proportion  to  the  usual  requirements  of  the  business. 
Since  there  was  no  prospect  of  a  rise  in  price  in  the 
immediate  future,  manufacturers  attempted  to  dispose 
of  their  goods  at  once;  frequently,  they  were  not  able 
to  dispose  of  them  through  the  ordinary  channels. 
For  some  lines  of  goods  auctions  were  held;  for  other 
lines,  manufacturers  went  direct  to  consumers,  hiring 
temporary  space  in  retail  districts  and  selling  at  prices 
lower  than  those  maintained  by  the  regular  retailer. 
Disregard  of  the  usual  channels  of  distribution  gave 
rise  to  a  good  deal  of  friction,  and  one  of  the  problems 
of  ever}^  company,  which  attempted  to  dispose  of  its 
goods  in  unusual  ways,  was  that  of  regaining  the  good 
will  of  distributors  whom  it  expected  to  sell  in  subse- 
quent seasons. 


SALES  METHODS  339 

A  large  packing  company,  distributing  its  goods 
ordinarily  through  brokers  and  wholesalers,  undertook 
to  sell  in  case  lots  to  consumers  and  sent  out  to  an 
enormous  mailing-list  circulars  offering  the  goods  at 
prices  considerably  lower  than  those  prevailing  in  retail 
markets.  A  large  knitting  company  in  the  center  of 
New  York  State  took  space  in  the  newspapers,  offering 
reduced  prices  to  consumers  of  underwear.  It  appeared 
that  the  company  had  alwaj'-s  sold  through  the  regular 
channels,  and  considerable  criticism  was  aimed  at  it 
because  of  this  particular  move  on  the  ground  that  it 
would  alienate  the  interests  of  retailers  and  wholesalers. 
In  answer,  the  company  published  the  following : 

To  accomplish  one's  object  and  purpose  is  gratifying, 
and  while  the  retailer  may  not  view  it  in  the  same  light  as 
we  do,  we  feel  certain  that  the  public  will. 

For  several  months  past  we  have  offered  our  surplus 
stock  of  men's  and  women's  underwear  to  our  regular  jobbing 
trade,  but  without  results,  and  were  informed  by  them  that 
they  were  unable  to  make  further  purchases  because  the 
retailers  not  only  refused  to  buy,  but  instead  were  canceling 
ordei's  previously  placed  and  returning  those  already  deliv- 
ered, the  retailers  claiming  the  prices  were  too  high  and  must 
come  down. 

Prices  did  come  down,  but  the  retailer  made  no  material 
reduction  to  the  consumer.  On  the  contrary,  in  one  instance, 
the  head  of  a  large  retail  organization  issued  a  statement 
that  the  pu])lic  should  not  expect  lower  prices  until  their 
stocks  owned  at  top  prices  had  been  liquidated.  This  action 
was  certainly  inconsistent  with  their  attitude  toward  the 
jobbers  and  manufacturers,  so  we  decided  to  take  a  step 
toward  helping  the  consumer,  which  step  we  knew  would 
make  the  retailer  "wake  up"  and  thus  perhaps  result  in  our 
accomplishing  our  purpose. 

Inasmuch  as  our  mill  is  situated  in  Groton,  we  selected 
that  town  as  the  best  location  to  reach  the  surrounding  terri- 
tory. We  offered  only  surplus  stock  to  consumers  at  prices 
consistent  with  present  conditions.  The  sale  lasted  five  days 
and  after  having  accomplished  the  desired  results  in  wak- 
ing up  the  retailers,  who  decided  it  timely  to  lower  their 
prices  to  the  consumer,  we  called  the  sale  off.  We  maj' 
be  criticized  by  the  trade  and  some  competitors,  but  are 
willing  to  leave  it  to  the  public  whether  w'e  have  made  an 
error  or  not. 


34U        PHOBLKMS  IN  SALES  MANAGEMENT 

W(>  ask  one  (lucstion.  How  can  we  dispose  of  tlie 
luercliaiulise  returned  l)y  the  retaik'rs  to  the  jol)l)er,  who  in 
tuiii  ihiiii|)e(|  them  li;ick  on  the  iiiaiiiifact iirers? 

Yours  truly, 
TiiK  Hyde  Knit  Goods  Co. 

Questions 
Is  this  sufficient    to  (>x|)hiiu  tlie  iictioii  of  the  com- 
puny  to  dealers  who  liaiidletl  this  l)raiid  of  underwear 
so  that  they  will  eontiuue  to  stock  it? 
(a)   If  not.  what  should  he  done? 


Problem  !2()() 
Dealer  Helps 

According  to  newspaper  reports  a  congress  of  retail 
merchants  was  held  in  1920  in  Chicago  under  the  direc- 
tion of  Butler  Brothers,  wholesalers  of  general  merchan- 
dise. More  than  300  retailers  attended  the  session, 
which  lasted  two  daj's.  Most  of  the  speakers  on  the 
program  were  retailers.  There  was  also  a  banker, 
who  talked  on  the  business  outlook  and  there  was  an 
expert  accountant,  who  discussed  the  necessity  for 
system  in  the  store.  The  congress  was  held  for  the 
double  purpose  of  getting  retailers  to  market  so  they 
could  buy  goods  and  also  to  enable  the  officials  of  the 
house  to  get  in  closer  personal  touch  with  leading  retail- 
ers. The  company  arranged  the  program  and  provided 
for  certain  entertainment,  but  did  not  assume  the  trav- 
eling expense  or  hotel  expenses  of  visiting  merchants. 

Questions 

1.  What  are  the  requirements  for  success  of  such  a 
plan? 

2.  Would  the  plan  be  suitable  for  a  hardware  jobber 
or  manufacturer? 

(a)  A  dry-goods  jobber? 


SALES  METHODS  341 

Problem  207 
Dealer  Helps 

The  H.  N.  Hurd  Company  three  years  ago  placed 
upon  the  market  an  all-steel  unbreakable  vacuum 
bottle.  Two  salesmen,  believeing  that  this  bottle  had 
definite  advantages  over  the  glass-lined  bottle,  left  the 
makers  of  a  standard  vacuum  bottle  to  go  to  this  firm. 
They  were  able  men  and  placed  orders  with  new  cus- 
tomers in  the  space  of  a  few  weeks,  but  repeat  orders 
came  slowly.  Dealers  everywhere  complained  that 
bottles  did  not  move  from  their  shelves.  It  was  known 
that  the  Hurd  bottles  had  to  sell  for  nearly  double  the 
price  of  the  glass  bottles,  but  it  was  felt  that  the  un- 
breakable feature  was  worth  more  than  the  difference 
in  price.  It  was  found  on  investigation  that  retailers 
and  their  clerks  knew  ^-ery  little  about  the  bottle. 

Question 
What  methods  might  be  adopted  to  develop  a  repeat 
business? 


Problem  208 
Promotion  of  Sales  by  Means  of  Visits  of  Customers 

TO  Plant 

The  general  sales  manager  of  a  prominent  wholesale 

dry-goods  concern,  which  controls  several  cotton  textile 

mills,  suggests  that  as  a  means  of  increasing  the  good 

•will  of  its  retail  dealers,  it  send  the  retail  merchants 

(its  customers)  to  the  mills  for  a  visit. 

The  wholesale  house  is  located  in  Chicago,  and  the 
dealers  are  generally  north  or  west  or  in  the  Chicago 
territory.  The  mills  are  located  in  North  Carolina 
and  Virginia. 

The  sales  manager  declares  that  it  is  very  desirable 
that  retailers  be  better  informed  as  to  the  merchandise 
they  sell,  as  well  as  imbued  with  the  real  appreciation 


342      i'1{()Hli:ms  in  saj>ks  management 

of  it,  and  learn  something  of  the  time,  labor,  material 
and  expert  knowledge  re(iuired  to  make  it.  If  the 
house  should  take  a  number  of  them  down  to  their  mills 
and  show  tluMu  the  processes  of  manufacture,  the  money 
so  expended  could  be  ver}'  properly  charged  to  sales 
promotion  rather  than  to  entertainment.  The  com- 
pany has  never  made  entertainment  a  feature  of  its 
relations  with  customers.  It  does  not  pay  their  rail- 
road fares  when  they  go  to  Chicago  to  buy,  or  give  them 
presents  or  unusual  discounts;  it  prefers  to  put  the 
money  which  might  be  so  expended  into  quality  of 
merchandise. 

Question 
Is  this  a  profitable  method  of  increasing  the  trade  of 
the  concern? 


Problem  209 
Securing  Jobber  Good  Will  for  Producer's  Brand 

The  California  Associated  Raisin  Company,  a  co- 
operative organization  of  raisin  growers,  prior  to  1915 
was  accustomed  to  taking  orders  for  raisins  to  be  packed 
under  private  brands  of  jobbers  or  dealers. 

In  1915  it  established  its  own  brand,  called  the  ''Sun 
Maid  Brand,"  began  advertising  extensively,  and  put 
traveling  men  in  the  field  covering  the  entire  country-. 
After  several  years,  the  company  decided  to  abandon 
all  private-brand  business.  It  is  stated  that  this 
action  was  due  to  the  fact  that  its  advertising  and  sales 
work  had  created  such  a  tremendous  demand  for  Sun 
Maid  Raisins  they  could  not  successfully  handle  the 
volume  of  business,  if  they  permitted  their  manufac- 
turing ^department  to  be  handicapped  by  orders  for 
private^brands. 


SALES  METHODS  343 

Early  in  1921  it  seemed  that  the  attitude  of  the 
grocery  trade,  particularly  the  wholesalers,  was  be- 
com  ing  more  openly  antagonistic  to  its  private-brand 
policy. 

Question 
What   measures   should   the    California   Associated 
Raisin  Company  take  to  secure  and  retain  the  good  will 
of  grocery  jobbers? 


Problem  210 

Retaining  Good  Will  of  Dealers  when  Placing 

Improved  Product  Upon  Market 

The  Gillette  Safety  Razor  Company  manufactures 
a  widely  advertised  safety  razor,  manufactured  under 
patents  which  expire  the  latter  part  of  1921.  Antici- 
pating this  expiration,  the  company  put  upon  the 
market  a  new,  improved  safety  razor  having  a  number 
of  special  features  not  possessed  by  the  old  style.  In 
advertising  and  in  general  policies,  the  new  razor  is  to 
be  treated  much  as  the  old  one.  Anticipating,  like- 
wise, the  flood  of  imitations  of  the  old  style,  the  Gillette 
Company  planned  to  put  upon  the  market  old-style 
sets,  which  will  sell  not  at  the  $5  price  at  which  they 
were  previously  sold,  but  for  $1,  $2.50  and  $3  a  set. 

The  problem  of  the  Gillette  Company  was  to  place 
upon  the  market  a  new  razor  for  which  a  $5  price 
had  been  fixed,  while  retaining  the  good  will  of  the 
many  thousands  of  dealers  who  were  handling  the  old 
style.  The  company  planned  to  spend  about 
$2,000,000  in  exploiting  the  new  razor,  beginning  its 
campaign  about  the  middle  of  May,  1921,  over  six 
months  prior  to  the  expiration  of  the  old  patents.  The 
company  sells  more  than  75%  of  its  product  through 
jobbers. 


344        TKOliLluMS  L\   SALIIS  MANACIKMENT 

It  has  ahvciys  heon  a  part  of  the  pohcy  of  the  com- 
pany to  take  back  for  exchange  unsalable  stock  from 
the  hands  of  one  dealer  and  to  place  it  in  other  hands, 
where  it  can  be  easily  sold.  It  seoined  impracticable 
for  the  company  to  take  back  all  the  discontinued 
styles  of  Gillette  razors  found  on  the  shelves  of  250,000 
dealers  in  the  United  States.  On  the  other  hand, 
much  good  will  of  the  dealers  was  likely  to  be  lost 
unless  some  interest  was  taken  in  the  disposition  of  the 
styles  which  became  out  of  date  as  soon  as  the  new 
sets  were  placed  on  the  market. 

Quesiions 

1.  Should  the  company  attempt  to  make  allow- 
ances upon  stocks  of  old  razors? 

(a)   If  so,  on  what  basis  should  it  be  determined? 

2.  How  should  the  matter  be  handled  when  the 
allowance  is  to  be  made  through  jobbers? 


Problem  211 
Cooperation  with  Dealer  in  Local  AovERTisiNCi 

The  advertising  manager  of  the  Rockwell  car  is 
confronted  with  the  problem  of  organizing  his  plans 
for  dealer  help,  particularly  with  a  problem  of  the 
attitude  of  the  company  toward  local  advertising. 
In  order  to  secure  a  broader  basis  for  decision,  he  made 
a  trip  and  called  upon  manufacturers  of  well-known 
passenger  cars,  with  the  result  that  he  found  that  a 
cooperative  arrangement  of  distributors  was  made  by 
only  five  companies,  and  cooperative  arrangement 
with  dealers  as  well  as  distributors  was  made  by  only 
six  companies  (two  of  these  offered  the  plan  only  to 
larger  dealers).  One  company  did  not  share  local 
advertising  with  either  distributors  or  dealers.     It  was 


SALES  METHODS  345 

found  that  dealers'  advertising  allowance  was  based  as 
follows  :* 

A.  Company — According  to  territory  covered,  number 
of  cars  allotted,  and  newspaper  rates.  The  figure  thus 
arrived  at  is  inserted  in  the  sales  agreement. 

B.  Company — No  stated  amount  is  set,  but  uniform 
schedule  is  used  in  all  cities  and  towns  where  the  company 
has  good  representation. 

C.  Company — Factory  allowance  is  based  upon  a  cer- 
tain amount  per  car. 

D.  Company — Straight  fifty-fifty  allowance  to  distributors, 
but  allowance  to  dealers  is  based  upon  so  much  per  car. 

E.  Company — Definite  campaign  is  decided  upon  by 
the  factory  and  uniform  copy  used,  the  dealers  agreeing  to 
pay  one-half  the  cost. 

F.  Company — No  stated  allowance.  Factory  determines 
amount  of  advertising  to  be  used  in  each  individual  case. 

G.  Company — There  is  no  written  agreement,  but  a 
verbal  understanding  with  di-tributors  and  large  dealers 
that  they  will  go  fifty-fifty  on  local  advertising  placed  by 
the  factory.  The  factory  is  guided  largely  by  the  dealers' 
wishes  in  regard  to  the  amount  of  advertising  to  be  used. 

H.  Company — This  is  a  new  company  and  the  advertis- 
ing policy  has  not  been  definitely  settled.  However,  they 
propose  to  operate  on  a  fifty-fifty  basis. 

I.  Company — A  uniform  schedule  is  decided  upon  by 
the  factory  for  O-month  periods,  and  the  distributors  are 
billed  each  month  for  one-half  the  cost. 

J.  Company — Straight  fifty-fifty  basis,  with  practically 
no  limit  as  to  the  amount  of  advertising  that  may  be  used 
by  the  dealcM'. 

A  rigid  rule  that  only  factory  copy  be  used  for  local 
advertising  has  been  established  by  eight  companies. 

Will  allow  credit  on  copy  furnished  or  approved  by 
the  factory,  one  company. 

Permit  dealers  to  write  their  own  copy,  three  com- 
panies. 

Advertising  agency  places  all  dealer  advertising  for 
six  companies. 

All  local  advertising  is  placed  by  dealer  or  f^istribu- 
tor,  three  companies. 

*Priniers'  Ink. 


34C        rUOHl.KMS  I\  SALES  MANAGEMENT 

Factoi'y  specifies  media  to  ))e  used  for  local  adver- 
tising, eight  companies. 

Publishers  hill  half  the  cost  of  advertising  to  dealer 
and  half  to  ach'ertising  agency,  four  companies. 

Factory  bills  half  the  cost  to  dealers,  three  companies. 

Dealers  place  the  advertising  and  bill  half  the  cost 
to  the  factory,  three  companies. 

Questions 

1.  Which  plan  should  be  adopted  by  the  Rockwell 
Company? 

2.  What  points  would  you  include  in  your  contract 
with  the  company  in  which  you  agree  to  pay  for  part 
of  the  advertising? 


Problem  212 
Local  Advertising  for  Manufacturer's  Brand 

A  manufacturing  concern,  which  is  selling  direct  to 
retailers,  required  that  its  dealers  pay  out  in  adver- 
tising an  amount  equal  to  10%  of  the  stock  on  hand 
when  his  agency  begins.  The  company  further  recom- 
mends strongly  that  the  local  advertising  be  continued 
each  month  on  the  basis  of  5%  of  the  previous  month's 
gross  sales  of  the  product. 

Quesiions 

1.  Can  this  plan  ^be  used  by  the  manufacturer  of  a 
nationally  advertised  shoe? 

2.  Could  it  be  applied  b}'^  a  manufacturer  of  toilet 
preparations? 


SALES  METHODS  347 

Problem  213 
Distributing  Dealer  Helps 

Manufacturers  who  get  out  dealer  helps  are  usually 
confronted  with  the  problem  of  avoiding  waste  in  their 
use.  Many  are  sent  to  dealers  who  do  not  use  them, 
and  dealers  frequently  write  for  material  which  they 
do  not  subsequently  use.  It  is  suggested  that  the  most 
obvious  solution  is  to  make  a  nominal  charge  for  such 
material.  This  is  open,  however,  to  the  objection  that 
only  really  progressive  retailers  can  be  sold  on  the  idea 
of  paying  for  helps  that  the  majority  of  manufacturers 
are  only  too  anxious  to  give  away.  Where  a  retailer 
has  an  agency  for  a  long  line  and  runs  into  large  sales 
or  big  profits,  he  can  often  be  convinced  that  it  is  best 
for  him  to  pay  for  the  advertising  accessories  and 
selHng  helps. 

Question 

Should  Armour  &  Company,  or  the  Victor  Talking 
Machine  Company  charge  for  dealer  helps? 


Problem  214 
Securing  Utilization  of  Dealer  Helps 

Several  manufacturers  of  automobile  accessories 
have  received  requests  from  the  Gibson  Company,  large 
jobbers  of  accessories  located  in  Indianapolis,  to  par- 
ticipate in  a  plan  for  tying  up  advertising  and  dealer 
helps.  The  details  of  the  plan  worked  out  by  the 
Gibson  Company  are  briefly  as  follows: 

At  first,  onl}''  one  dealer  in  each  town  is  to  be  selected 
to  receive  this  merchandising  service.  This  dealer  must  have 
a  good  retail  location,  effective  display  windows,  satisfactorj^ 
credit  standing,  a  systematic  stock-keeping  method,  a  modern 
bookkeeping  system,  and  must  show  beyond  question  that 
he  is  entering  into  the  spirit  of  the  plan  with  wholehearted 


348        TKOJiLKMS  IN  SALKS  MANACiKMKNT 

enthusiasm.  If  lie  ])roves  well  suppliotl  with  enthusisam, 
but  is  hu'kiug  in  some  of  the  (^ther  ixuiuirements,  the  Gibson 
Company  is  willinfz;  to  j^o  to  fi;reat  lengths  to  help  him.  For 
instanec,  it  has  developed  a  standard  bookkeeping  system 
for  retail  automobile  supph'  stores  and  is  willing  and  anxious 
to  establish  and  sell  it  at  cost  to  all  dealers  desiring  it. 

Eaeh  manufaeturer  is  asked  by  the  Gibson  Company  to 
cooperate  in  two  ways:  first,  by  funiishing  a  complete 
schedule  of  his  advertising  i)lans  for  the  year,  specifying 
mediums,  with  dates  of  insertions;  and  second,  to  supply 
the  company  an  adequate  stock  of  window  trims,  posters, 
show-cards,  electros,  retail  sales  manuals,  printed  matter, 
etc.  The  jobbing  company  then  goes  to  the  dealer  selected 
in  each  town  and  explains  the  w^hole  plan  carefully,  giving 
each  a  complete  schedule  for  the  year,  showing  exactly  what 
he  is  to  do  each  week  and  how  lie  is  to  do  it.  One  article 
is  to  l)e  featured  by  the  dealer  each  week,  the  particular 
week  selected  in  each  case  being  one  that  coincides  with  the 
appearance  of  advertising  for  that  article  in  national  publi- 
cations. All  dealers  receiving  this  service  are  required  to 
cooperate  as  follows:  insert  window  display  on  day  and  in 
manner  si)eciffed;  display  the  special  article  alone  on  top 
of  display  case;  properly  disi)lay  other  advertising  furnished; 
furnish  Gibson  Company  with  copy  of  each  advertising 
as  run  in  local  paper;  display  an  advertisement  clipped 
from  national  publication  on  article  in  window;  see  that  all 
salespersons  are  properly  instructed  in  the  special  selling 
features  of  the  article  being  featured;  dealers  receiving  this 
service  are  also  required  to  own  a  corrected  mailing-list  of 
all  automobile  owners  in  the  county  and  to  authorize  a 
systematic  monthly  mailing  to  this  list.  The  mechanical 
handling  of  the  mailing  is  to  l)c  taken  care  of  })y  the  Gibson 
Company's  advertising  department. 

Question 
What   ai'e  the  ad\'aiitages  and  objections  from  the 
view-point  of  the  manufacturers? 


SALES  METHODS  349 

Problem  215 
Bonuses  Given  by  Manufacturers  to  Jobbers'  Salesmen 

It  has  been  asserted  that  a  large  number  of  manufac- 
turers of  food  products  give  or  have  given  bonuses  to 
jobbers'  salesmen.  Although  not  so  prevalent  as 
formerly,  the  practice  is  still  a  common  one.  Whole- 
salers' associations  are  much  opposed  to  the  plan, 
claiming  that  it  tends  to  make  the  salesmen  worth  less 
to  the  jobber  than  the  manufacturer  giving  the  bonus. 
Many  jobbers  resent  the  effort  on  the  part  of  the 
manufacturer  to  influence  salesmen  in  the  direction  of 
one  product  or  another. 

Question 

If  bonuses  are  to  be  discontinued  as  a  means  of 
securing  the  favorable  interest  of  jobbers'  salesmen, 
what  other  methods  are  open  to  the  manufacturer  of 
patent  cereals  sold  through  jobbers? 


Problem  216 

Training  Retail  Sales  Force  to  Sell 

Manufacturers'  Product 

A  paint  company  proposes  to  get  new  agents  for  its 
line  of  paints  started  right  in  part  by  holding  evening 
meetings  with  retail  clerks,  in  which  representatives 
of  the  company  take  up  in  detail  the  manufacture  and 
sale  of  its  products,  tell  the  clerks  what  is  in  the 
package,  what  arguments  to  use  in  selling  its  goods, 
and  other  information  of  value. 

Questions 

1.  What  are  the  advantages  and  objections  of  the 
plan  from  the  view-point  of  the  manufacturer? 

2.  How  can  approval  of  retail  store  proprietors  be 
secured? 


350        PHOIU.KAIS  IN  SALES  MANAGEMENT 
Problem  217 

BUDGETINC;    SaLIOH    and    PUOFITS    FOR    JoHUINC 
RkI'UESENTATIVKS 

For  the  purpose  of  helping  its  wholesale  dealers  and 
increasing  its  own  sales,  the  Newman  Rubber  Company 
has  frecjuently  drawn  up  a  budget  for  wholesale  repre- 
sentatives. These  budgets  are  made  upon  the  basis 
of  past  performance  plus  an  estimate  of  i)ossibilities  in 
the  particular  territory.  Recently,  a  certain  represen- 
tative of  this  company  handling  its  rubber  footwear 
was  dissatisfied  and  discontinued  the  line.  In  order 
to  induce  another  wholesaler  to  take  up  the  line  and 
also  to  set  before  him  a  statement  of  expected  accom- 
plishment, the  marketing  manager  undertook  to  draw 
up  a  budget  showing  that  this  new  wholesaler  could 
take  up  business  in  his  territory  with  profit  to  himself. 
The  possible  annual  business  for  the  territory  was 
estimated  on  the  basis  of  past  sales  of  the  old  represen- 
tative at  $200,000.  In  this  particular  territory  the 
average  turno\'er  of  stock  is  three  times  per  year.  The 
average  length  of  accounts  receivable  is  75  days.  The 
manufacturer  gives  the  usual  wholesale  discount, 
namely,  8%  plus  8%.  Besides  this  usual  commission, 
a  bonus  of  2%  is  given  for  placing  orders  early  for  at 
least  60%  of  the  business.  A  further  bonus  of  2% 
is  given  for  sales  of  $150,000  or  over.  It  is  customary' 
to  take  orders  for  canvas  footwear  in  the  fall  for  ship- 
ment in  December,  January,  February  and  March, 
practically  equal  amounts  each  month.  The  due  date 
for  all  shipments  is  July  1,  and  an  anticipatory  discount 
at  the  rate  of  1%  per  month  is  allowed,  which  will  be 
taken  by  the  wholesaler  upon  about  60%  of  his 
purchases. 

Questioji 

Prepare  the  budget  showing  the  gross  profit,  the 
amount  of  capital  necessary  to  finance  sales,  and  the 
per  cent  return  possible  on  capital  used  for  financing. 


SALES  METHODS  351 

Problem  218 

Consignment  Methods  as  Means  of  Controlling 

Policies  of  Distributors 

One  of  the  large  electric  companies  in  its  lamp 
division  sells  two  general  classes  of  mazda  and  metallized 
filament  incandescent  lamps.  In  general,  the  busines 
may  be  divided  into  two  classes:  (1)  the  miniature 
lamps,  which  are  used  for  flash-lights,  on  automobiles, 
and  for  decorative  purposes,  and  are  sold  direct; 
(2)  large  lamps  used  for  general  illuminating  purposes. 
The  business  in  miniature  lamps  is  only  12  to  18%  of 
the  gross  sales.  There  are  over  1,000  styles  of  incan- 
descent lamps,  each  designed  for  a  specific  purpose; 
but  in  most  central  stations  and  in  most  dealers'  stocks, 
only  a  small  proportion  of  these  sizes  is  needed  to  fill 
ordinary  demand.  The  market  for  incandescent  lamps 
is  national  and  susceptible  of  unlimited  development. 
The  demand  for  lamps  increases  with  the  extent  to 
which  electrical  generating  apparatus  is  sold  and 
installed. 

In  order  to  control  policies  with  reference  to  distribu- 
tion in  the  case  of  the  larger  lamps,  the  consignment 
method  is  used;  that  is,  the  larger  lamps  are  not  sold 
outright,  but  placed  on  consignment  with  the  various 
classes  of  distributors.  Distributors  are  of  several 
types:  first,  those  who  redistribute;  second,  those  who 
sell  direct  to  consumers;  third,  central  stations.  In 
addition,  some  of  the  larger  contracts  of  users  are 
handled  directly  by  the  company.  Distributors  who 
redistribute  are  designated  as  B  agents;  these  must 
sell  under  the  legal  appointment  at  least  $20,000  a  year. 
Distributors  who  sell  only  direct  to  consumers  are 
designated  as  A  agents,  whose  sales  must  be  at  least 
$500  per  year.  As  soon  as  sales  amount  to  $20,000, 
an  A  agent  becomes  automatically  a  B  agent.  This 
carries  with  it  added  discounts,  privilege  of  nominating 
A  agents,  and  entitles  him  to  commissions  on  the 
business  of  such  agents  as  he  develops.  Legally,  both 
types  of  agents  are  appointed  by  the  manufacturer, 
but  the  B  agents  develop  the  A  agents  and  receive 


:3r)2        PKOHLKMS  IX  SALKS  MANAGEMENT 

special  compensation  for  that  service.  B  agents  are 
permitted  to  supply  the  agents  specified  by  the  man- 
ufacturer aiul  no  others.  Likewise,  an  A  agent  may 
receive  goods  only  from  the  particular  B  agent  .specified 
in  the  appointment.  B  ag(Mits  are  allowed  an  extra 
commission  of  2%  on  all  orders  furnished  out  of  stock. 
Furthermore,  in  order  to  encourage  prompt  remittance, 
both  from  B  agents  on  their  direct  business  and  on  the 
business  of  A  agents  done  through  them,  an  added 
5%  is  allowed  on  the  net  amount  remitted,  provided 
it  is  received  by  the  fifteenth  of  the  month  following 
the  .sale.  Each  agent's  territory  is  exclusive,  but  is 
not  larger  than  he  can  cover  with  intensive  selling 
methods. 

Question 
Does  the  capital  requirement  to  carry  out  such  a 
plan  ofTset  the  advantage  of  control  of  agents? 


Problem  219 
Sales  Contract  with  Large  Consumers 

Does  the  following  contract,  used  by  a  rubber  tire 
manufacturer,  avoid  difficulties  with  distributors  selling 
tires  in  the  territory  in  which  the  user  is  located? 

Commercial  Agreement 

TPIIS  AGREEMENT  between  the  GORHAM   RUB- 
BER PRODUCTS  COMPANY,  INC.,  Boston,  Mass., 

First  Party,  and 

of Second  Party, 

made  this day  of 192 

WITNESSETH: 

In  consideration  of  the  following  prices  and  guarantees 
the  Second  Partv  agrees  to  purchase  from  the  First  Party 

GORHAM  TIRES  exclusively  for tire 

requirements  for  motor  vehicles  owned  by 

for from   date  of    this    con- 


SALES  METHODS  353 

tract;  also  to  specify  GOEHAM  TIRES  on  any  motor 
vehicles  purchased  during  the  life  of  this  Agreement. 

The  Fir^  Party  agrees  to  allow  the   Second   Party 
Sales  Proposition  as  follows : 


TERMS: 


A  5%  Cash  Discount  will  i)e  allowed  if  payment  is 
made  promptly  on  or  before  due  date. 

This  Agreement  covers 

Pneumatic  Tires  at list. 

Solid  Tires  at list. 

Tires  purchased  under  this  contract  are  covered  by 
the  regular  standard  guarantee  of  the  Gorham  Rubber 
Products  Company,  Inc.,  printed  on  the  reverse  side  of 
this  sheet,  and  which  is  made  a  part  of  this  Agreement. 

In  case  of  reduction  of  prices  by  the  Company,  the 
purchaser  will  have  the  benefit  of  the  same  and  goods 
will  be  billed  at  the  prices  in  force  on  date  of  shipment. 

This  Agreement  shall  be  in  force  until  the 

day  of and  may  be  renewed  by 

the  Second  Party  at  any  time  within  thirty  (30)  days 
prior  to  date  of  expiration  of  this  Agreement,  basing 
prices  for  the  new  Agreement  on  market  conditions. 

It  is  agreed  that  the  tires  covered  by  this  Agreement 
are  purchased  by  the  Second  Party  for  equipment  to  its 
own  cars  and  not  for  re-sale  purposes. 

This  Agreement  is  subject  to  fires,  strikes,  and  other 
contingencies  beyond  the  control  of  either  party. 

IN  WITNESS  WHEREOF  the  Parties  hereto  have 

hereunto  set  their  hands  and  seals  this 

day  of 192 

{Reverse  side  of  Agreement) 

SOLID  TIRE  GUARANTEE 

The  Company  will  replace  with  a  Solid  Tire  any 
Solid  Tire  bearing  the  name  of  the  Company  and  serial 
numbers  not  defaced,  which  in  its  opinion  before  having 
run  10,000  miles  and  with  proper  use  and  care,  and  within 


.s.-)!      i'i;()I'.i.i:ms  i\  sales  management 

twelve  montlis  from  date  of  first  application  on  Gasoline 
Vehicles  and  within  eiy;hteen  months  from  date  of  first 
application  on  I'-h'ctric  driven  Vehicles,  develops  manu- 
facturing; defects  reudeiiuK  it  unfit  for  further  use.  Such 
replacement  to  be  conditional  as  follows: 

Payment  of  the  Company  of  an  amount  which  in  its 
judf!;ment  will  be  fair  compensation  of  the  service  actually 
rendered  by  the  replaced  tire;  that  the  tire  has  been 
returned  to  the  Company  transportation  charges  prepaid; 
that  the  tire  has  not  carried  excessive  loads,  or  been 
driven  at  (excessive  speeds,  or  has  l)een  otherwise  damaged 
or  al)used. 

PNEUMATIC  TIRE  GUARANTEE 

The  Company  guarantees  all  automobile  tires,  bear- 
ing the  Brand,  "GORHAM  RUBBER  CO.,"  and  serial 
number,  to  be  free  from  imperfections  in  material  and 
workmanship.  Tires  returned  for  consideration  under 
this  guarantee  will  be  accef)ted  only  when  all  transpor- 
tation charges  are  prepaid.  If,  upon  examination,  it  is 
the  Company's  judgment  that  tires  are  defective,  they 
will  be  repaired  or  replaced  at  their  option. 

When  tires  are  replaced,  charges  will  be  made  to 
owners  at  the  time  new  tires  are  delivered  for  such 
amounts  as  in  the  Company's  judgment  will  compensate 
for  the  service  rendered  by  such  replaced  tires. 

Tires  worn  out  in  usual  or  unusual  service,  abused 
knowingly  or  unknowingl}',  misused,  used  on  rims  not 
bearing  stamps  No.  1  or  No.  2,  or  on  wire  wheels  not 
bearing  stamp  No.  3,  injured  through  accident  or  design, 
are  not  covered  by  this  guarantee. 

Tires  are  not  guaranteed  to  give  any  definite  miles 
of  service,  and  any  and  all  guarantees  are  expressly 
waived  by  any  purchaser  of  these  tires  who  uses  therein 
any  substitute  for  air;  or  who  uses  them  under  weights 
in  excess  of  those  for  which  the  various  tires  are  recom- 
mended, or  who  does  not  keeji  tires  inflated  to  the  pres- 
sure recommended  by  the  Company. 


f 


SALES  METHODS  355 

Problem  220 
Dealers'  Contract 

The  Wilson  and  O'Neil  Company  uses  the  following 
contract  when  granting  exclusive  agencies  to  retail 
dealers : 

AGENCY  CONTRACT 

This     agreement     made     and     entered     into     this 

day  of ,  19 

by  and  between 

Wilson  and  O'Neil  Paint  Co.,  Inc. 
a  corporation,  organized  and  doing  bushiess  under  the 
laws  of  the  State  of  Michigan  and 

of 

hereinafter  designated  as  Dealer, 

Witnesseth : 

That  for  and  in  consideration  of 

of ,  State  of 

,  having  accepted  the  agency  for 

Wilson  Products  from  Wilson  and  O'Neil  Co.,  Tnc,  and 
in  further  consideration  of  said  dealer  confining  his  pur- 
chases in  the  paint  line,  so  far  as  possible  to  Wilson  and 
O'Neil  Co.,  Inc.,  Products,  said  Wilson  and  O'Neil  Co., 
Inc.,  agree  to  furnish  their  regular  publicity  display, 
educational  and  follow-up  advertising,  also  to  use  news- 
paper advertising  space  according  to  the  attached 
schedule;  such  advertising  to  l)e  run  on  lines  actively 
stocked  by  the  Dealer.  This  advertising  is  to  be  run  in 
paper  selected  by  Delaer  and  in  the  name  of  Dealer  as 

exclusive  Wilson  agent  for , 

copv  to  be  furnished  and  space  paid  for  bv  Wilson  and 
O'Neil  Co.,  Inc. 

This  agreement  is  contingent  upon  Wilson  and  O'Neil 
Co.,  Inc.,  maintaining  their  present  high  standard  of 
quality  and  keeping  their  prices  as  compared  with  other 
standard  lines  proportionate  to  what  they  now  are. 

In  consideration  of  Wilson  and  O'Neil  Co.,  Inc., 
having  the  full  cooperation  of  Dealer  in  the  promotion 
cf  his  i^iaint  business,  Wilson  and  O'Neil  Company,  Inc., 

agree  to  increase  the  paint  sales  of  said  Dealer 

per  cent  (  %)  within  one  year  from  the  time  a  repre- 
sentative line  is  placed  on  the  shelves  of  the  Dealer,  or 
all  unsold  Wilson  Products,  in  salable  condition,  may  be 
returned  at  the  market  price  to  Wilson  and  O'Neil  Co., 
Inc.,  at  the  option  of  the  Dealer. 


356        PKOHLKMS  IN  HALiuS  MANAGEMENT 

It  is  understood  this  ajiiveinont  covers  a  period  of 
two  (2)  years  from  this  (hite,  at  the  expiration  of  wliich 
time  it  may  he  renewed  or  caneeUed  at  the  option  of 
either  party,  and  it  is  further  understood  that  this 
exchisive  sales  agency  does  not  inchide  Insecticides, 
Brushes,  Laundry  Sujijilies,  Artists'  Materials,  Special 
(irindings  for  Maiiulact urers  of  Merchandise  for  State 
Institutions. 

Wilson  and  O'Neil  Co.,  Inc. 

By 

Accepted 

It  is  mutually  a<j;ree(l  that  the  prices  on  the  merchan- 
dise covered  hy  the  original  stock  order,  placed  in  con- 
nection with  this  afj;ency  contracts,  are  to  be  those  in 
effect  during  the  spring  season  of  1921. 

Dealer 

By 

Wilson  and  O'Neil  Co.,  Inc. 
By. 

Question 
Will  this  contract  tend  to  stimulate  sales  activity  on 
the  part  of  the  dealer? 


Problem  221 
Contracts  with  Distributors 

A  manufacturer  of  automobiles  wishes  to  work  out 
a  sales  contract  for  his  distributors.  He  has  on  hand 
a  copy  of  a  contract  used  b\'  a  prominent  automobile 
manufacturer  who  has  a  very  large  output  and  whose 
agencies  are  eagerly  sought.  The  contract  is  as 
follows : 

From Branch 

Curtice  Sales  Agreement 

This   agreement    made    at    Detroit,    Michigan,    this 

day  of  19 ...  .  by  and  between  the  Curtice 

Motor  Company,   a   Michigan   corporation  of   Detroit, 


SALES  METHODS  357 

Michigan,  hereinaftor  known  as  the  Manufacturer,  and 

of 

in  the  State  of ,  hereinafter  known 

as  the  Dealer,  Witnesseth: 

(1)  That  Manufacturer  hereby  grants  to  Dealer  the 
privilege  of  selling  Manufacturer's  products  in  the  man- 
ner, upon  the  terms  and  within  the  territory  herein  spe- 
cificially  set  forth. 

(2)  Dealer  shall  make  sales  of  Curtice  automobiles, 
trucks,  chassis,  parts  and  accessories  only  to  residents  of, 
or  to  persons  permanently  employed  in,  the  following 
specified  territory  shown  on  the  attached  map,  and  to  no 
other,  namely: 


(3)  The  sale  by  Dealer  of  new  and  second-hand 
Curtice  automobiles,  trucks,  chassis,  part  or  accessories 
to  residents  outside  of  Dealer's  territory  is  a  serious 
damage  to  Manufacturer  and  its  other  Dealers  and  tends 
to  destroy  the  organization  and  business  of  Manufacturer 
and  Manufacturer  may  cancel  this  agreement  for  any 
such  violation. 

(4)  The  territory  herein  assigned  to  the  Dealer  is  not 
exclusive,  but  Manufacturer  reserves  the  right  to  appoint 
other  Dealers  in  the  same  territory,  to  make  sales  therein. 
If,  however.  Manufacturer  shall  not  appoint  other  dealers 
in  said  territory,  then  this  agreement  shall  be  exclusive, 
and  in  such  case.  Manufacturer  reserves  the  right  to 
make  direct  sales  to  customers  in  said  territory  and  will 
pay  Dealer  one  and  only  one  commission  of  twelve  and 
one-half  per  cent  (123/^%)  of  the  list  price  of  Curtice 
automobiles,  trucks  or  chassis  so  sold  after  it  shall  have 
received  the  full  purchase  price  therefor  in  cash.  Manu- 
facturer expressly  reserves  the  right  to  sell  its  products 
to  the  United  States  Government,  or  to  any  of  the  Depart- 
ments thereof  or  to  the  American  Red  Cross  without  the 
payment  of  any  discount  or  commission  whatever  to  the 
Dealer,  and  Dealer  agrees  to  immediately  turn  over  to 
the  Manufacturer  any  inquiries  or  orders  received  there- 
from without  any  payment  or  compensation  to  him  there- 
for and  to  make  deliveries  of  the  Manufacturer's  products, 
as  it  may  direct,  without  charge  for  the  handling,  etc. 

(5)  Dealer  agrees  to  maintain  a  place  of  business  and 
properly  equipped  sales  rooms  and  service  station  for 


3r)8        PROBLEMS  IN  SALES  MANAGEMENT 

Curtice  automobiles,  trucks,  and  chassis  acceptal)lc  to 
tho  Maiuifactuicr,  prominently  located  for  the  purpose 
of  conductinji;  sucii  business,  and  shall  employ  competent 
salesmen  and  efficient  workmen  and  Manufacturer  shall 
not  in  any  wise  be  responsible  for  any  charges  connected 
with  such  jilace  of  ])usiness.  Dealer  also  agrees  to  pur- 
chase for  himself  and  keep  in  use  at  all  times  at  least  one 
(yurtice  automobile  of  the  current  year's  model,  for  the 
sole  {)urpose  of  demonstration  and  exhibition  to  intending 
purchasers  and  to  maintain  same  at  all  times  in  proper 
running  contlition  and  good  clean  order  and  repair.  If 
he  sells  said  demonstrating  automobile  before  the  same 
shall  have  been  in  use  three  months,  Dealer  agrees  that 
he  will  sell  it  on  the  terms  and  on  the  conditions  herein 
governing  the  retail  sale  of  new  cars. 

(6)  Dealer  agrees  to  conspicuously  display  Curtice 
signs  on  and  in  his  building  and  windows,  designating 
that  he  is  a  Curtice  dealer  for  the  territory  specified 
herein  and  he  shall  adequately  advertise  the  Manufac- 
turer's product  in  the  local  papers  and  otherwise,  and  give 
his  immediate  and  careful  attention  to  all  inquiries,  and 
give  good  representati<m  to  all  interests  of  Manufacturer. 
Dealer  agrees  not  to  advertise  or  trade  in  the  Manufac- 
turer's product  in  such  a  way  as  to  be  an  annoyance  or 
injurious  to  it  or  any  of  its  other  duly  appointed  Dealers, 
and  that  he  will  not  repeat  any  advertisements  or  publish 
or  use  any  form  of  advertising  matter  to  which  the 
Manufacturer  objects,  and  that  he  will  follow  as  closely 
as  possible  advertising  copy  sugg(>sted  from  time  to  time 
by  the  Manufacturer.  Under  no  circumstances  will 
Dealer  be  i)ermitted  to  use  the  name  "Curtice"  as  i)art 
of  his  fii'm  or  corporate  name.  When  agreement  of  Dealer 
is  cancelled  or  terminated,  he  agrees  to  immediately 
remove  all  Curtice  signs  and  discontinue  Curtice  adver- 
tising, 

(7)  In  order  that  Manufacturer  may  determine  the 
prospective  requirements  of  its  business  and  may  base 
its  purchases  for  mateiials,  etc.,  thereon,  the  dealer  agrees 
that  he  will  furnish  the  Manufacturer  on  form  provided, 
prior  to  December  31st  of  each  year,  an  estimate  of  the 
number  of  Curtice  automobiles,  trucks  and  chassis  Dealer 
will  sell  at  retail  and  to  be  shipped  him  in  the  various 
months  of  the  following  year  as  specified. 

(8)  Manufacturer  agrees  that  the  estimate  and  ship- 
ping specifications  of  the  Dealer  will  receive  Manufac- 
turer's careful  attention,  but  Manufacturer  does  not  agree 
absolutely  to  fill  them,  but  expressly  reserves  the  right 


SALES  METHODS  359 

to  refuse  them  from  time  to  time,  or  such  parts  of  them 
as  Manufacturer  deems  necessary  or  proper,  and  all  such 
estimates  are  subject  to  delays  occurring  from  any  cause 
whatsoever  in  the  manufacture  and  delivery  of  its  prod- 
uct— no  legal  liability  to  fill  such  estimates  being  incurred 
under  any  circumstances.  And  the  Dealer  may  cancel, 
upon  one  month's  written  notice  to  Manufacturer,  any 
unfilled  part  of  said  estimate. 

(9)  Manufacturer  shall  not  be  liable  in  any  way  for 
delayed  shipments  or  on  account  of  shipments  by  any 
other  than  a  specified  route. 

(10)  Manufacturer  will  sell  its  Curtice  automobiles, 
trucks  and  chassis  to  Dealer  as  hereinafter  provided  at 
seventeen  and  one-half  per  cent  (173^%)  discount  from 
its  established  list  price  f.  o.  b.  Detroit,  Michigan. 

(11)  Dealer  shall  pay  to  Manufacturer  in  cash  or  by 
accepting  and  paying  sight  draft  attached  to  bill  of  lading, 
including  exchange,  the  full  list  price  at  the  time  of  pur- 
chase from  Manufacturer  of  its  automobiles,  trucks, 
chassis  less  a  discount  of  seventeen  and  one-half  per  cent 
(173/2%)-  The  title  to  all  products,  until  actually  paid 
for  by  Dealer,  shall  be  and  remain  in  Manufacturer. 

(12)  Dealer  shall  pa}^  the  freight  from  Detroit  or 
such  Branch  House  as  the  Manufacturer  may  elect  to 
ship  from,  and  advance  freight,  to  Dealer's  place  of 
business.  Dealer  shall  pay  all  expense  incurred  by 
Manufacturer  for  crating,  boxing,  packing,  double  deck- 
ing and  loading  its  products.  All  shipments  will  be  at 
Dealer's  risk  from  time  of  delivery  to  carrier  by  Manu- 
facturer at  place  of  shipment.  Dealer  shall  collect  from 
retail  buyers  for  freight  charges  and  delivery  expenses 
S on  each  Curtice  automobile,  truck  and  chas- 
sis sold  in  addition  to  the  regular  price  of  such  Curtice 
automolnle,  truck  and  chassis. 

(13)  Dealer  shall  pay  any  taxes  that  may  be  levied 
upon  or  against  or  on  account  of  such  business  on  his 
stock,  or  any  Curtice  automobiles,  trucks  and  chassis  as 
may  be  in  his  possession  or  in  transit  on  bill  of  lading 
or  otherwise  for  delivery  to  him.  Dealer  shall  pay  any 
present  or  future  United  States  tax  or  excise  upon  or  in 
respect  of  each  automobile,  truck  and  chassis,  part  or 
accessory,  as  may  be  in  his  possession  or  in  transit  on 
bill  of  lading  or  otherwise,  for  delivery  to  him. 

(14)  Dealer  agrees  that  he  will  purchase  from  the 
Manufacturer  and  carry  at  his  place  of  business  an 
adequate  stock  of  genuine  Curtice  parts  at  all  times 
during  the  term  of  this  agreement.     Inasmuch  as  the 


3(i()        PKOIU.KMS  IN  SALES  MANAGEMENT 

ri'putiitiou  of  Curlic'i'  Hut(Muul)il('s,  (rucks,  and  chassis 
is  often  injured  by  the  use  therein  of  parts  made  by 
otliers,  Manufacturer  sup;^ests  that  all  purchases  of  parts 
by  the  DealcM'  shall  be  made  as  to  all  parts  listed  in  its 
parts  catalog;,  exclusively  from  the  Manufacturer  and 
tliat  he  will  not  use,  sell,  or  reconnnend  to  ('urtice  owners 
or  others,  similar  parts  manufactured  by  others. 

(15)  Manufacturer  agrees  to  allow  the  Dealer  a  dis- 
count of  forty  per  cent  (40%)  on  all  parts  of  Curtice 
automobiles,  trucks  and  (;hassis  listed  in  th(>  Curtice  parts 
price  list  f.  o.  1).  Detroit,  Michiji;an.  Dealer  afj;rees  to 
allow  a  discount  of  twcMity-five  per  cent  (25%)  f.  o.  b. 
his  place  of  business  on  such  parts  to  all  public  garages 
and  repair  sho])s  in  his  territory.  Discount  of  forty  per 
cent  (40%)  is  allowed  in  consideration  of  Dealer  carrying 
an  adequate  amount  of  stock  provided  above,  selling  to 
public  garages  and  repair  shops  at  a  discount  of  twenty- 
five  per  cent  (25%)  and  faithful  performance  of  the  other 
provisions  of  this  agreement. 

(16)  Manufacturer  reserves  the  right  to  sell  and 
deliver  or  cause  to  be  sold  and  delivered  any  parts  of 
Curtice  automobiles,  trucks,  and  chassis,  repairs,  accesso- 
ries or  other  goods  that  may  be  ordered  from  it  by  any 
person  within  the  territory  covered  by  this  agreement, 
without  the  payment  of  any  profit  or  allowance  or  com- 
mission or  any  discount  or  credit  whatever  to  the  Dealer 
upon  such  sales. 

(17)  Manufacturer  may  change  the  list  prices  of  any 
of  its  products  at  any  time  and  in  case  of  increase  or 
reduction  in  such  list  prices,  Manufacturer  shall  not  be 
bound  to  make  any  allowance  to  Dealer  on  any  of  its 
products  shii)])ed  before  such  changes  take  effect,  except  in 
case  of  a  reduction  in  price  the  Manufacturer  will  allow 
the  Dealer  a  proportionate  rebate  on  the  purchase  price 
only  on  such  automobiles,  trucks,  and  chassis  as  were 
shipped  to  the  Dealer  within  thirty  days  immediately 
before  such  change  and  still  r(M.nain  in  his  possession  unsold 
at  the  date  of  such  reduction. 

(18)  Dealer  shall  obtain  from  each  purchaser  of  a 
Curtice  automo])ile,  truck  or  chassis  a  written  order  duly 
signed  by  the  purchaser,  upon  Retail  Buyer's  Order  to  be 
furnished  by  Manufacturer,  together  with  a  cash  deposit 
of  not  less  than  fifty  dollars  ($50.00)  on  each  Curtice 
automobile,  truck  or  chassis  and  will  file  with  Manufac- 
turer such  original  Retail  Buyer's  Order  after  delivery 
of  such  Curtice  automol^ile,  truck  or  chassis  to  the  cus- 
tomer.    Manufacturer  shall  have  the  right  at  any  time  to 


I 


SALES  METHODS  361 

visit  Dealer's  place  of  business  and  check  up  and  verify 
all  Retail  Buyers'  Orders. 

(19)  This  agreement  shall  continue  in  force  and  govern 
all  transactions  between  the  parties  hereto  until  canceled 
or  terminated  by  either  party,  but  it  is  agreed  that  either 
party  shall  have  the  privilege,  with  or  without  cause,  to 
cancel  and  annul  this  agreement  at  any  time  upon  written 
notice  by  registered  mail,  or  personal  delivery  of  notice 
to  the  other  party,  and  such  cancellation  of  all  unfilled 
retail  and  other  orders  and  requisitions  for  all  products 
of  Manufacturer  which  may  have  l)een  received  by  the 
Manufacturer  from  the  Dealer  prior  to  the  date  when  such 
cancellation  is  served. 

(20)  In  case  of  the  cancellation  or  termination  of  this 
agreement  the  Manufacturer  may,  at  its  option,  re-pur- 
chase from  the  Dealer  at  the  price  which  he  paid  therefor, 
plus  freight,  all  such  of  the  aforesaid  new  and  unusecl 
Curtice  automobiles,  trucks,  chassis,  parts  and  acces- 
sories as  he  may  have  on  hand  unsold  at  the  date  of  such 
cancellation  or  termination.  Manufacturer  shall  be 
entitled  to  take  possession  of  all  such  Curtice  automobiles, 
trucks,  chassis,  parts  and  accessories  remaining  on  hand 
and  wherever  found,  without  any  legal  liability  what- 
ever, upon  tendering  to  Dealer  the  said  purchase  price 
thereof  plus  freight. 

(21)  Upon  termination  of  this  agreement  by  can- 
cellation or  otherwise  the  Dealer  shall  turn  over  to  the 
Manufacturer  all  bona  fide  retail  orders  that  he  may  have 
on  hand  unfilled  and  also  list  of  any  prospective  purchasers 
within  his  knowledge  and  the  Manufacturer  shall  not  he 
lia])le  in  any  manner  whatsoever  on  account  of  the  can- 
cellation or  termination  of  this  agreement,  even  though 
thereafter  the  Manufacturer  or  any  new  representative 
should  complete  any  deals  inaugurated  by  Dealer. 

(22)  Dealer  agrees  that  he  will  make  repairs  on  all 
Curtic(^  automobiles,  trucks  and  chassis  in  his  territory, 
or  coming  into  his  territory,  whether  soUl  through  him  or 
not,  and  to  perform  this  work  promptly  and  in  workman- 
like manner,  and  that  he  will  not  remove  or  alter  the 
Manufacturer's  patent  plate,  motor  number,  or  other 
numbers  or  marks  affixed  to  any  Curtice  automobile, 
truck,  chassis,  part  or  accessory  or  permit  it  to  be  done. 

(23)  Manufacturer  owns  and  the  Curtice  automobiles, 
trucks,  chassis  are  manufactured  under  and  embody  the 
following  letters  patent  of  the  United  States  of  America, 
or  some  of  them,  namely:  (design  patents  and  application 
for  letter  patents  now  pending  and  undetermined) .     Manu- 


31)2      pi{()inj:Ais  IX  sAi.Ks  ma.\ac;rmknt 

fiicturcr  furllicr  owns,  and  Curtice  automoljilcs,  trucks, 
chassis,  parts  and  accessories  are  manufactured  and  sold 
under  and  enil)ody  the  exchisive  rij^ht  to  the  use  of  the 
name  "("urtice"  accjuired  l»y  and  tlu'ou<i;h  United  States 
copyright  and  ti'ach'-mark  registration.  The  vaHdity  of 
eadi  of  said  patents  and  of  the  saitl  trade-mark  rej^istra- 
tions  and  tratle  user  rij^hts  and  chiims  of  the  Manufacturer 
under  said  appUcations  is  hereby  expressly  admitted;  and 
it  is  afj;reed  that  the  sale  and  use  of  said  Curtice  aut(^mobiles, 
trucks,  chassis,  parts  and  accessories,  as  ckilivered  to  the 
Dealer  are  restricted  according  to  the  terms  of  this  agree- 
ment and  that  no  license  is  given  to  handle  or  use  said 
Curtice  automol)iles,  trucks,  chassis,  parts  or  accessories 
under  such  patents  and  applications,  except  strictly  in 
accordance  with  the  terms  and  conditions  of  this  agree- 
ment. 

(24)  The  failure  of  the  Manufacturer  to  enforce  at 
any  time  any  of  the  provisions  of  this  agreement,  or  to 
exercise  any  option  which  is  herein  provided  or  to  require 
at  any  time  peiformance  l)y  the  Dealer  of  any  of  the 
provisions  hereof,  shall  in  no  way  be  construed  to  be  a 
waiver  of  such  provisions,  nor  in  any  waj'  to  affect  the 
validity  of  this  agreement  or  any  part  thereof,  or  the  right 
of  the  Manufacturer  to  thci'caft(n'  enforce  each  and  every 
such  provision. 

(25)  It  is  agreed  that  the  Dealer  is  in  no  way  the  legal 
representative  or  agent  of  Manufacturer  for  any  purpose 
whatsoever  except  as  expressly  stated  in  this  agreement 
and  has  no  right  or  authority  to  assume  or  create  any 
obligation  of  any  kind,  expressed  or  implied,  on  behalf  of 
Manufacturer  or  to  l^ind  it  in  any  respect  whatever.  He 
shall  make  no  warranty  or  representation  of  Manu- 
facturer's products,  but  shall  refer  purchaser  to  Retail 
Buyer's  Order  and  the  printed  literature  of  Manufacturer 
for  any  warranty  made  by  Manufacturer. 

(26)  Dealer  shall  have  no  right  to  assign  this  agree- 
ment, or  any  interest  in  it  without  the  written  consent  of 
the  IManufacturer. 

(27)  It  is  nmtually  understood  this  is  a  ^Michigan 
agreement  and  shall  be  construed  as  such.  And  it  is 
further  understood  by  the  parties  hereto  that  this  is  a 
general  selling  agreement  intended  for  use  by  Manufac- 
turer wherever  its  products  may  be  sold  and  therefore  if 
any  of  its  provisions  shall  contravene,  or  be  invalid,  under 
the  laws  of  the  particular  State,  Country  or  Jurisdiction 
where  used,  then  it  is  agreed  that  such  contravention  or 
invalidity  shall  not  invalidate  the  w^hole  agreement  but 


I 


SALES  METHODS  363 

it  shall  be  construed  as  if  not  containing  the  particular 
provision  or  provisions  held  to  be  invalid  in  the  said 
particular  State,  Country  or  Jurisdiction  and  the  rights 
and  obligations  of  the  parties  shall  bo  construed  and 
enforced  accordingly. 

In  Witness   Whereof    the    parties    have    hereunto. set 
their  hands  and  seals  the  day  and  year  first  above  written. 

Signature  of  the  Dealer  Signature  of  the 

Manufacturer 

(L.  S.)  Curtice  Motor  Co. 


By (L.  S.)      By (L.  S.) 

Branch  Manager. 

Question 
Is  this  contract  suitable  for  an  automobile  manufac- 
turer who  is  attempting  to  market  a  new  car? 


Problem  222 
Exclusive  Agency  Contracts 

While  a  written  contract  is  in  many  cases  desirable 
from  the  view-point  of  the  manufacturer  when  dealing 
with  exclusive  agencies,  there  are  many  instances  of 
exclusive  agencies  having  been  granted  without  formal 
contract.  Prominent  clothing  manufacturers,  who 
make  a  practice  of  selling  only  to  one  dealer  in  a  town, 
do  not  ordinarily  require  written  contracts.  There  is 
an  implied  understanding  that,  in  return  for  rights  to 
the  sale  of  the  manufacturer's  product,  the  dealer  will 
push  the  goods  of  the  manufacturer  and  possibly  will 
handle  no  directly  competing  lines.  However,  in  the 
automobile  trade  and  in  some  other  lines  it  is  customary 
to  use  agency  contracts  in  which  are  set  forth  not  only 
the  agreements,  but  also  the  policies  of  the  manufac- 
turing concern.  The  content  of  such  a  contract  is 
usually  left  to  the  legal  counsel.  The  export  trade 
makes  widespread  use  of  exclusive  agency  contracts, 
and  it  is  suggested  that  export  experience  may  offer 


3G4        I'Kom.KMS  IX  SAI.KS  MANAGEMENT 

somotliiii^  to  tlu'  niaimfacturer  in  handling  domestic 
sales  agencies. 

A  prominent  export  manager  has  listed  the  following 
points  to  he  covered  in  the  contract  between  the 
manufacturer  and  the  foreign  agent:* 


Agent's  official  name  and  address; 
Seller's  official  name  and  address; 
Nature  of  relation  and  mutual  obligations; 
Territory  and  products; 

Reserved  rights  of  seller  in  described  territory; 
Terms  of  contract; 

Method  and  time  of  compensation  of  agent; 
Protection  of  agent  and  compensation  on  direct 
and  indirect  sales  in  his  territory; 
Prices,  discounts,  etc.; 
Terms  of  sale; 

Conditions    surrounding    sales    by    agent    for 
account  of  seller; 

Provisions  covering  bankruptcy,  etc. ; 
Prices  at  which  agent  shall  sell; 
Granting  or  withholding  right  of  agent  to  sell 
outside  his  own  territory; 

Right  of  agent  to  sell  or  act  as  agent  for  com- 
peting products; 

Allowances  for  advertising,  samples  and  selling 
expense; 

Required  purchases  or  sales  in  each  year  of 
agency  relation ; 

Definition  of  such  purchases  or  sales  and  of 
required  relation  (if  any)  between  purchases  by 
agent  in  comparison  with  sales  to  others ; 
Provisions  relating  to   the  possible   failure  of 
agent  to  reach  purchase  or  sales  totals; 
Statement  of  the  right  of  seller  to  pass  on  and 
to  limit  credits  or  sales  totals; 
Cancellation  clauses; 


SALES  METHODS  365 

(22)  Rights  and  privileges  of  seller  and  agent  at 
expiration  of  contract  or  at  termination  of  con- 
tract equitably  protected; 

(23)  Repairs,  damages  and  claims  defined  and  policy 
and  practice  portrayed; 

(24)  Provision  for  disposition  of  stock  at  ending  of 
contract ; 

(25)  Non-assignability  of  contract. 

Questions 
Should  all  of  these  points  be  provided  for  in  a  con- 
tract between 

(a)  a  manufacturer  of  automobiles  and  his  state 
and  retail  distributors; 

(h)  a  manufacturer  and  a  distributor  of  automobile 
accessories; 

(c)  a  manufacturer  of  talking  machines  and  retail 
dealers?    ' 


Problem  223 
Sales  Contracts  for  Canned  Goods  Futures 

For  many  years,  there  has  been  friction  between  can- 
ning companies  and  wholesale  groceries  with  respect  to 
the  terms  of  sales  contracts.  In  the  spring  of  1921  the 
National  Wholesale  Grocers'  Association,  through  a 
committee  on  contracts,  recommended  the  following 
form  of  contract: 


3l)(i       PR()HLI:MS  IX  SALi:S  maxacikment 

National   Wholesale  (iuocERs'   Association   of  the 
United  States 

Conlnu't  for  Ciuiiiccl  I'nrils  and  Vegetables 

192.. 

Place  and  date 

of hereby 

sells,  and of 

hereby  purchases,  subject  to  the  agreements  and  condi- 
tions set  forth  upon  the  back  hereof  and  hereby  made  a 
part  of  this  contract,  the  following  described  canned  goods: 

Description: 


Delivery— F.  0.  B 

(Seller) 

Freight — To  be  paid  by  Buyer. 

Terms — 70%  payment  against  draft,  five  days'  sight, 
less  2%  and  balance  on  arrival,  prompt  examination  and 
approval;  or  all  cash,  less  13^2%  five  days  after  car  is 
available  for  examination;  or  30  days  net;  buyers'  option. 


(Seller) 
By 

(Buyer) 
By 


(Brokers) 

Future  Deliveries — Goods  sold  for  future  delivery 
shall  be  shipped  during  packing  season,  or  not  later  than 
30  days  after  packing  season  closes. 

Seller  agrees  to  provide  for  sufficient  acreage  on  basis 
average  crop  yield  to  cover  all  goods  sold.  If  causes 
beyond  seller's  control  prevent  full  deliver}-,  buyer  will 
accept  75  per  cent  deliver}'  with  all  other  buyers  of  same 
grades.  If  seller  does  not  make  75  per  cent  delivery,  he 
shall  pay  buyer  an  amount  equal  to  one  per  cent  of  the 
price  for  each  one  per  cent  reduction  below  75  per  cent 
total  c^uantity  herein  purchased,  but  in  no  case  shall 
delivery  be  less  than  50  per  cent. 

Buyer  shall  have  privilege  of  reducing  quantity  to  75 
per  cent  of  total  quantity  herein,  provided  he  mails  seller 
written  notice  before  packing  season  opens. 


SALES  METHODS  367 

Special  Guaranty — Seller  shall  ship  in  bright, 
merchantable  cans. 

Goods  sold  before  or  during  packing  season  are  guar- 
anteed against  spoils,  swells,  leaks  and  springers  until 
September  1st  of  following  year.  Subject  to  requirements 
of  food  and  sanitation  laws,  and  except  for  cans  cut, 
spoils,  swells,  leaks  and  springers  shall  be  held  subject  to 
seller's  order.  Seller  shall  reimburse  buyer  at  contract 
price  for  spoils,  swells,  leaks  and  springers. 

Goods  sold  after  packing  season  are  guaranteed  against 
spoils,  swells,  leaks  and  springers  to  September  1st  follow- 
ing date  of  sale,  provided,  however,  that  such  guaranty 
shall  in  every  case  continue  for  at  least  six  months  after 
date  of  sale. 

Labels— If  buyer's  labels  are  used,  seller  shall  allow 
cost  of  his  labels  for  similar  grades.  If  shipped  unlabeled, 
a  labor  allowance  to  buyer  of  Ic  per  dozen  on  sizes  smaller 
than  No.  10  and  4c  per  dozen  for  No.  10  shall  be  made. 
Seller  shall  also  properly  stencil  ends  of  cases.  Buyer's 
labels  and  stencils,  charges  prepaid,  shall  be  in  seller's 
possession  in  time  to  make  proper  shipment. 

Packing — Shipment  shall  be  made  in  well  nailed, 
standard  wooden  cases,  unless  otherwise  specified  in 
contract;  all  cases  and  containers  shall  comply  with  tariff 
schedules  filed  with  Interstate  Commerce  Commission. 

General  Guaranty — Seller  guarantees  goods  to  con- 
form to  national  and  state  food  laws  and  regulations  and 
to  have  been  canned  in  accordance  with  state  and  federal 
child  labor  laws. 

Liability — In  case  of  destruction  of  business  property 
of  either  party  by  fire  or  other  accident,  contract  may  be 
canceled  upon  prompt  written  notice  to  the  other  party. 
In  case  of  partial  loss  to  seller's  property,  undamaged 
portion  of  goods  shall  be  delivered  pro  rata  on  unfilled 
contracts. 

Arbitration — All  disputes  arising  under  this  contract 
shall  be  arbitrated  in  the  usual  manner,  unless  there  is  a 
regular  Arbitration  Committee  appointed  by  the  National 
Wholesale  Grocers'  Association  and  National  Canned 
Foods  and  Dried  Fruit  Brokers'  Association,  and  indorsed 
by  the  National  Canners'  Association,  for  the  district  in 
which  the  dispute  arises,  and  then  by  three  members  of 
such  arbitration  board.  Decision  of  the  arbitrators  shall 
be  final  and  binding.  The  cost  of  arbitration  shall  be 
paid  by  the  loser. 


368        PROBLEMS  IN  SALES  MANAGEMENT 

Certificate  of  Car  Loading — Copy  of  certificate  of 
car  loading  shall  be  presented  with  invoice. 

Certificate  of  Car  Loading 
{Carbon  copy  to  be  presented  with  invoice  to  save  loss 
and  damage  claims  and  deduction). 

The  undersigned  hereby  certify  to  the  following  service: 

We  have: 

Inspected  car  No for  leaky  roof,  walls 

and  doors,  nails,  bolt-heads,  blocks  and  braces  that  might 
injure  contents,  and  we  have  protected  against  them. 

Cleaned  car  of  dirt,  filth,  oils  and  grease,  or  have 
covered  same  to  protect  contents  loaded  by  us. 

Sealed  all  containers  in  accordance  with  the  classifica- 
tion, outside  flaps  meeting,  boxes  square  and  true  and 
flaps  thoroughly  sealed  over  the  entire  surface.  Wooden 
cases  have  solid  or  closely  fitting  sides,  ends,  tops  and 
bottoms  securely  fastened  and  no  broken  parts  exposing 
contents. 

Loaded  the  contents  with  can  on  end,  spaced  the  rows 
to  fit  the  car  snugly  in  width  and  length,  with  no  space 
between  rows  or  tiers. 

Braced  boxes  loaded  above  the  grain  lining  and  braced 
boxes  in  uneven  rows  and  boxes  forming  incomplete  top 
layers  and  boxes  about  car  doors  to  avoid  shifting  and 
rubbing.  (Bracing  while  especially  important  on  long 
hauls  is  needed  on  all  cars  on  account  of  switching.) 

Counted  contents  and  find 


Closed  car  doors  snugly,  sealed  car  doors  and  lined 
top  and  side  cracks  of  cars  with  heavy  waterproof  paper 
or  suitable  materials. 

(Signed)' 

Canning  Company 

Cooper 

Load  and  Tally 

Shipping  Clerk 

Note — Where  contract  permits  fibre  boxes,  and  such  containers 
have  been  used,  the  tops  of  those  containers  containing  unlabeled  goods 
should  be  sealed  with  tape  only.  Moreover,  car  loading  certificate 
should  include  statement  that  bill  of  lading  has  been  stamped  as 
required  by  the  classifications  for  shipments  in  fibre  containers. 


I 


SALES  METHODS  369 

At  the  same  time  one  of  the  largest  canning  and  pack- 
ing companies,  with  general  offices  in  Chicago,  uses  a 
contract  form  as  follows: 

(1)  Terms  of  Payment.  IJ4,%  discount  for  cash  in  10 
days  from  date  of  invoice,  or  60  days  net. 

(2)  Conditions:  S.  A.  P.  contracts  are  subject  to  buyers' 
immediate  confirmation  when  opening  prices  are 
named. 

(3)  Swells,  blown  and  pierced  tins  from  future  delivery 
purchases  guaranteed  to  July  1  following  the  year 
packed.  Spot  delivery  purchases  six  months  from 
date  of  shipment. 

(4)  In  case  of  destruction  of  l^uyer's  place  of  business 
by  fire  or  the  elements  prior  to  the  fulfillment  of  this 
contract,  the  buyer  shall  have  the  right  to  cancel 
same  by  giving  seller  written  notice  to  that  effect 
within  five  days  after  such  destruction  occurs.  This 
provision  shall  apply  only  to  unshipped  portion  of 
order  and  shall  not  apply  to  shipments  made  prior 
to  the  receipt  of  notice  of  cancellation. 

(5)  Seller  shall  not  be  liable  for  short,  late  or  non- 
delivery of  goods  resulting  from,  or  contributed  to, 
by  damage  to  its  contracted  crop,  strikes,  fire,  flood 
or  any  cause  beyond  its  control,  or  any  unavoidable 
casualty  or  circumstance,  in  which  event  it  is  mutu- 
ally agreed  that  deliveries  are  to  be  prorated  to  all 
buyers  without  discrimination  from  suitable  stock 
remaining  in  seller's  possession. 

(6)  In  case  of  withdrawal  from  sale  of  one  or  more  items 
prior  to  seller's  receiving  contract,  specifications  or 
change  in  specifications,  the  seller  has  privilege  of 
not  accepting  items  withdrawn. 

(7)  Goods  are  at  risk  of  buyer  after  delivery  to  carrier; 
seller  does  not  assume  any  responsibility  for  any 
change  in  transportation  rates,  either  an  advance  or 
decline,  that  may  take  place  between  the  time  this 
contract  is  entered  into  and  shipment  is  made. 

(8)  Seller  will  not  be  responsible  for  any  delivery,  ter- 
minal distributing,  handling,  storage  or  demurrage 
expense  at  destination. 

(9)  Notwithstanding  shipped  to  seller's  order,  goods  are 
at  risk  of  buyer  from  and  after  delivery  to  carrier, 
and  buyer  hereby  assumes  responsibility  as  to 
shortage,  loss,  delay  or  damage  in  transit  upon 
issuance  by  carrier  of  clean  bill  of  lading. 


370        PROBLEMS  TX  SALES  MANAGEMENT 

(10)  Seller  f2;iiarantces  goods  in  accordance  with  Food 
Law  (iiiarantee  adopted  by  the  National  Wholesale 
drocers'  Association  and  also  in  accordance  with  the 
State  and  National  l'\)0(l  Laws,  except  that  seller 
is  only  rcsponsiWle  for  misbranding  when  seller's 
labels  and  brands  are  used.  Seller  disclaims  any 
responsibility  for  misbranding  when  goods  are  not 
shipped  under  seller's  lalx'ls. 

(11)  No  contract  shall  })e  binding  upon  seller  until  signed 
by  Wharton  Packing  Corporation,  Chicago.  Neither 
brokers  nor  salesmen  have  authority  to  make  any 
conditions,  verbal  or  written,  except  those  named 
hereon. 

(12)  Prices  guaranteed  against  seller's  decline  to  date  of 
shipment. 

(13)  Unless  otherwise  stated  in  this  contract,  the  mer- 
chandise hereby  sold  is  to  be  delivered  when  seller 
shall  have  them  ready  for  shipment. 

Questions 

1.  As  an  official  of  the  canning  company,  would  you 
be  willing  to  accept  the  contract  under  the  terms  pro- 
posed by  the  wholesale  grocers? 

2.  What  terms  in  the  packing  company's  form  of 
contract  might  be  objectionable  to  a  wholesale  grocer? 


Problem  224 
Future  Sales  Contracts  for  Dried  Fruits 

Dried  fruits  have  in  past  years  been  sold  commonly 
by  the  packing  companies  through  brokers  to  wholesale 
grocers,  under  two  general  terms  of  sale.  In  neither 
type  of  contract  made  for  future  deliver}^  are  prices 
specified.  In  one  type  of  contract,  called  the  S.  A.  P. 
contract,  the  purchase  made  by  the  wholesale  grocer  is 


SALES  METHODS 


371 


not  valid  until  prices  have  been  approved.  Usually, 
such  a  contract  is  stamped  "Subject  to  buyer's  approval 
of  contract,  terms  and  conditions  when  named  by 
seller."  The  other  type  of  contract,  called  the  F.  O.  P. 
contract,  calls  for  delivery  of  dried  fruits  at  opening 
prices,  the  phrase  used  being  "Firm  at  sellers'  opening 
prices,  terms,  and  conditions. 

Question 
Which  contract  is  preferable  for  a  wholesale  grocer? 


Problem  225 
Sales  Contracts — Knit  Goods 

The  following  contract  is  recommended  by  the 
National  Wholesale  Dry  Goods  Association  for  use  in 
purchasing  from  manufacturer  and  selling  houses: 


No. 


JOHN  DOE  KNITTING  COMPANY 

New  York,  N.  Y 1921. 


The   John   Doe    Knitting    Company    hereby    sells    and 

agrees  to  deliver  and 

of 

agrees  to  receive  and  pay  for  the  following  goods  at  the 
following  prices  and  upon  the  following  terms  and  conditions: 

Terms : 


Quantity 


Description 


28 


;^o 


:32 


u 


m 


:3s 


40 


42 


46 


48  etc.  Prices 


(The  length  of  the  above  cohimns  and  their  arrangement    to    be 
decided  according  to  j'our  needs.) 


1.  It  is  understood  that  the  prices  and  terms  of  this 
contract  shall  not  apply  to  or  have  any  bearing  upon 
any  other  contract. 


372        PROBLEMS  IN  SALES  MANAGEMENT 

2.  In  tlie  event  of  the  failure  of  the  seller  to  make 
delivery  of  any  ^oods  within  fifteen  clays  of  the  dates 
herein  specified,  the  ))uyer  shall  have  the  oi)tion  of 
receiviufi;  such  fi;()()(ls  as  soon  as  the  manufacturer 
can  make  deliveiy  thereof  or  of  cauceilinff  the  con- 
tract and  receivinf<;  as  Tuiuidated  daniaj;"cs  an  amount 
e(|ual  to  10%  of  the  contract  price  of  the  unde- 
livered portion  oi  such  past  due  {j;<>''ds.  Delivery 
to  the  carrier  and  mailinjz;  invoice  and  hill  of  lading 
to  the  purchaser  shall  he  deemed  a  delivery  to  the 
purchaser  in  absence  of  agreement  that  the  seller 
shall  invoice  but  hold  the  goods.  Can  you  make 
any  suggestions  for  improvement? 

3.  If  the  i)roduction  of  the  seller's  mill  shall  be  curtailed 
between  the  date  hereof  and  the  end  of  the  period 
for  delivery  specified  herein,  by  strikes,  lockouts, 
accidents,  fire,  casualties,  or  any  other  cause  beyond 
the  reasonable^  control  of  the  seller,  a  j^roportionate 
reduction  in  {piantity  delivered  may  l)e  made.  Upon 
the  occurrence  of  any  of  the  contingencies  mentioned 
above,  the  seller  siiall  mail  notice  to  the  l)uyer  within 
ten  days  after  he  has  knowledge  thereof. 

4.  The  deliveries  hereunder  are  subject  to  regulation  of 
credit  by  the  seller  from  time  to  time.  Furthermore, 
satisfactory  security  ])efore  manufacture  or  delivery 
may  be  demanded. 

5.  Merchandise  owned  by  the  buyer,  but  held  at  the 
seller's  mill  for  whatever  reason,  is  at  the  buyer's 
risk.  It  will,  however,  be  included  under  the 
general  fire  insurance  policies  of  the  mill,  and  in  case 
of  loss,  adjustment  will  be  made  out  of  the  insurance 
received,  pro  rata  with  all  goods  damaged. 

6.  Any  unsettled  differences  arising  out  of  this  contract 
regarding  quality,  construction  of  fal)ric,  details  and 
finish,  shall  be  settled  by  arbitration,  the  parties 
agreeing  to  submit  their  differences  to  a  board  of 
arbitration  appointed  for  one  year  as  follows: 

One  member  l)y  the  President  of  the  Knit  Goods 

Buyers'  Association. 
One  member  by  the  President  of  the  Knit  Goods 

Manufacturers  of  America. 

And  the  third  to  be  chosen  by  the  two  arbitrators 

above  mentioned  whose  decision  shall  be  final. 

This  contract  shall  become  binding   upon  both 

parties  w^hen  it  is  signed  by  an  officer  or  authorized 

agent  of  the  purchaser,  and  by  an  officer  or  author- 


I 


SALES  METHODS  373 

ized  agent  of  the  seller,  and  a  notice  of  acceptance  is 
mailed  to  the  purchaser  within  ten  days  from  date. 


Seller  Purchaser 

by by... 

Authorized  officer  or 
agent. 

Question 
Should  a  manufacturer  of  knit  goods  use  this  con- 
tract? 


Problem  226 
Sales  Contracts — Cotton  Textiles 

iVt  the  present  time  and  for  twenty-five  years  past, 
some  of  the  largest  cotton  brokers  in  this  country  have 
used  a  contract  reading  substantially  as  follows: 

Sold  for  account  of to to 

be  delivered to  count picks 

to  the  square  inch;  to  be inches  wide;  weight 

not  lighter  than yards  to  the  pound;  at 

cents  per  yard.     Terms ;  delivered ;  to  be 

shipped If  the  production  of  the Mill 

shall  be  curtailed  during  the  time  al)ove  named  by  strikes 
or  lockouts  to  counteract  strikes,  or  any  unavoidable 
cause,  the  deliveries  shall  only  be  made  proportionate  to 
production. 

To  meet  war  conditions  one  of  the  leading  commis- 
sion houses  in  the  market  amplified  this  form  by 
adding  the  following  clauses: 

(1)  If  deliver}"  to  transportation  company  is  prevented  or 
delayed  by  act  of  Government,  car  shortage,  embargo  or 
unavoidable  casualty,  delivery  of  bill  or  invoice  shall  con- 
stitute delivery  within  the  meaning  of  this  contract.  In 
case  of  default  or  delay  in  any  one  delivery  such  default  or 
delay  shall  not  affect  the  balance  of  the  contract. 


374        Pll()HLI']MS  IN  SALI08  MANAGEMENT 

(2)  Tliis  order  is  also  taken  subject  to  delay  in  delivery 
or  to  reduction  in  (juantit}'  in  whole  or  in  jiart  if  the  com- 
mercial production  of  the  mill  is  curtailed  or  interfered  with 
throuf^h  war  or  eml)arfj;o  or  ( Joverninent  act  or  nniuirement 
or  other  causes  beyond  our  control. 

(3)  If  the  production  of  the  mill  shall  be  curtailed  by 
strike,  lockout,  riot,  fire,  act  of  (l(^d  or  unavoidaljle  casualty, 
delivery  need  only  be  made  proportionate  to  production. 

(4)  Insurance — (Joods  billed  and  awaiting  shipment  are 
at  buyers'  risk.  Such  goods  will,  however,  be  covered  by 
us  by  fire  insurance  only,  pro  rata  with  all  other  stock  on 
hand  belonging  to  us  or  held  by  us  for  our  customers,  but 
without  guarantee  by  us  of  either  the  ciuantity  or  quality 
of  such  insurance. 

It  is  well  known  that  in  the  past  many  yards  of  goods 
have  been  bought  and  sold  without  the  forms  being 
completed;  some  buyers  will  not  sign  the  contracts  and 
sellers  have  not  pressed  the  matter. 

In  connection  with  the  discussion  as  to  new  forms, 
the  following  questions  were  asked : 

Questions 

1.  Are  intricate  forms  necessary? 

2.  What  revision  should  be  made  in  forms  quoted 
above? 


Problem  227 
Contracts  in  Iron  and  Steel  Industry 

The  following  forms  are  used  by  the  Burlington  Steel 
&  Iron  Company  (Form  A)  and  the  Sheffield  Steel 
Company  (Form  B)  to  cover  contract  sales  of  pig  iron 
and  rolled-steel  products. 


I 


SALES  METHODS  375 

FORM  A 

192.. 

Proposition  from 

Covering  Purchase  of  Pig  Iron  from 

BURLINGTON  STEEL  &  IRON  COMPANY, 
Pittsburgh,  Pa. 

Submitted  through 

Sales  Agent 

Sale  No 

Contract  No 

Quantity  Tons 

Grade  

Specification 

Price  

Per  ton  of  2240  lbs.,  delivered  f.o.b.  railroad 

ears  or  furnaces  at Ala. 

Cash  30  days  from  average  date  of  monthly 

Payment  deliveries  (invoice  date) 

Delivery  


The  seller  shall  not  be  responsible  for  delays  caused  by  strikes, 
differences  with  workmen,  accidents  at  the  works,  shortage  of  cars, 
delays  in  transportation,  or  other  causes  beyond  its  control. 

Each  month's  deliveries  shall  be  treated  as  a  separate  contract, 
independent  of  deliveries  for  other  months,  but  upon  the  failure  of 
the  purchaser  to  pay  for  any  iron  delivered  hereunder  within  the  time 
stipulated  for  such  payment  to  be  made,  the  seller  may  suspend 
further  deliveries  until  such  payment  is  made,  and  the  seller  may  also, 
at  any  time  when  the  purchaser  is  in  default  in  making  payment  for 
any  iron  delivered  hereunder  mthin  the  time  stipulated  for  such 
payment  to  be  made,  treat  the  contract  for  any  or  all  undelivered 
iron  as  broken  by  the  purchaser. 

In  case  of  any  default  whatsoever  of  the  seller  in  regard  to  install- 
ments herein  mentioned,  the  buyer  shall  not,  by  reason  thereof,  be 
excused  or  released  from  any  obligation  in  regard  to  other  installments. 

The  seller  will  not  be  liable  for  any  overcharge  in  freight  when 
correct  weight  is  expressed  in  bill  of  lading. 

This  contract  not  binding  on  seller  till  accepted  by  oflBcer  named 
on  form  below: 

ACCEPTED  AT  BIRMINGHAM,  ALABAMA. 

192. ... 

BURLINGTON  STEEL  &  IRON  COMPANY 

per 

vice-president 


PER 

purchaser 
EXECUTED  IN  DUPLICATE 


370        PKOliLEMS  IN  SALES  MANAGEMENT 

FORM  B  (piiKo  1) 

SHEFFIELD  STEEL  COMPANY 

PittsdtjRcii,  Pa. 

I^incK  No 

SlIHFKlKLI)  StKKL  CoMPANY  (UJI'irt^  to  sell 

and '. agrees  to  buy 

QUANTITY 
MATEULVL 

Material  to  he  within  llic  limits  and  of  the  sizes 
published  by  Seller  and  subject  to  Seller's  standard 
variations  for  rolling  and  cutting. 


PRICE 


DiV.    OK 

Tonnage 


Dktail  of 
Material 


Prices  and 
Extras 


PLACE  OF 
DELIVERY 


The  price  or  |)rices  quoted  herein  are  based  upon 

car  load  freight  rates  from to  the  place 

of  deliver}'  in  effect  at  the  date  of  this  agreement, 

viz cents  per  100  pounds.     In  the  event 

of  an  increase  in  such  freight  rates,  the  amount  of 
such  increase  shall  be  added  to  the  price  of  all 
materials  shipped  against  this  contract  during  the 
period  in  which  such  increased  rate  is  in  effect,  and 
in  the  event  of  a  decrease  in  such  freight  rates,  the 
amount  of  such  decrease  shall  be  deducted  from  the 
price  of  all  materials  shipped  hereunder  during  the 
period  in  which  such  decreased  rate  is  in  effect. 


Sheet  No.  2 

TERMS  OF 
PAYMENT 


Price  No. 


In  case  the  Buyer  shall  fail  to  make  payments 
in  accordance  with  the  terms  anfl  provisions  of  this 
agreement,  the  Seller  may  defer  further  shipments 
until  such  i)ayments  are  made,  or  may,  at  its  option, 
terminate  this  agreement. 


SALES  METHODS 


877 


CREDITS 


QUALITY 
SPECIFICA- 
TIONS 


TIME  OF 
PAYMENT 


Shipments  and  deliveries  under  this  agreement 
shall  at  all  times  be  subject  to  the  approval  of  the 
Seller's  Credit  Department;  and  in  case  the  Seller 
shall  have  any  doubt  as  to  the  Buyer's  responsibility, 
the  Seller  may  decline  to  make  any  further  shipments 
hereunder  except  upon  receipt  of  satisfactory  secur- 
ity or  for  cash  before  shipment. 


Specifications    shall    be    furnished    to    the    Seller 
by  the  Buyer  in  substantially  equal  monthly  quan- 
tities,   beginning  on  the day  of 19.  .  .  . 

and    ending    on    the day  of 19.  .  .  . 

The  Buyer's  failure  to  furnish  specifications  as 
aforesaid,  may,  at  Seller's  option,  without  notice 
to  Buyer,  be  treated  and  considered  as  refusal  to 
accept  and  receive  the  unspecified  portion  of  the 
goods. 


In  the  event  of  unavoidable  delay  due  to  fires, 
strikes  or  other  causes  beyond  the  control  of  the 
Seller,  the  Buyer  may,  subject  to  previously  ob- 
tained consent  of  the  Seller,  cancel  the  portion  of 
the  goods  not  manufactured  or  in  process  of  manu- 
facture at  the  time  his  request  to  cancel  reaches  the 
Works. 

The  Seller  shall  not  be  responsible  for  delays  in 
deliveries  caused  by  strikes,  differences  with  work- 
men, shortage  of  cars,  delays  in  transportation, 
accidents  at  mills,  or  other  contingencies  beyond 
its  control. 

EXECUTED  IN  DUPLICATE,  this 

day  of 19.. 


By. 


Sheffield  Steel  Company 


Assist.  Gen.  Manager  of  Sales. 


Questions 
What  are  the  advantages  and  disadvantages  of  such 
contracts  from  the  view-point  of 

(a)  the  purchasers  of  pig  iron  or  steel ; 
(6)   the  pig  iron  or  steel  producers? 


378       PROBLEMS  IN  SALES  MANAGEMENT 

Problem  228 
Orders  of  Specialty  Salesmen 

Jobbers  have  complained  very  frequentlj^  that  large 
niinibors  of  specialty  orders,  turned  in  to  them  by 
specialty  salesmen,  were  being  refused  at  time  of 
delivery.  The  American  Specialty  Manufacturers' 
Association  made  an  investigation  of  175  orders  turned 
back  to  a  certain  jobber  during  a  period  of  two  weeks. 
Thirty-six  reasons  were  given  by  the  retailers  for  the 
refusal  of  165  orders;  the  main  reasons  were  as  follows: 

Stores  closed  or  changed  hands 14 

Claimed  goods  delivered  and  accepted 12 

Canceled  over  phone  (added  to  regular  orders) 12 

Claimed  delivered  too  late  (purchased  elsewhere  in 

some  cases) 27 

Claimed  goods  not  delivered  (wrong  delivery  days  and 

hours) 21 

Did  not  have  money-check  (other  money  reasons, 

higher  prices) 22 

Wrong  goods  delivered  (wrong  address) 6 

Substitution. 1 

Plain  rejection 4 

Gave  order  to  get  rid  of  salesman 1 

Claim  did  not  sign 5 

Would  not  receive  old  cereals  authorized  by  salesman .  6 
Woman  gave  order  subject  to  husband's  sanction.  ...    1 

Sold  to  woman;  husband  refused 3 

Did  not  order 2 

Salesman  applied  "X,"  signed  merchant's  name 1 

Salesman  sold  goods  to  12-year-old  girl 1 

Woman  signed  order,  thinking  she  was  getting  samples  1 

Ordered  through  another  jobber 1 

Salesman  wrote  order  for  one  man,  signed  by  another .  1 
Miscellaneous 10 

Questions 
Can  any  conclusions  be  drawn  from  the  view-point  of 

(a)  a  manufacturer  of  branded,  advertised  baking 
powder; 

(b)  the  grocery  wholesaler? 


SALES  METHODS  379 

Problem  229 
Jobbers'  Discounts 

The  Aylsworth  Company,  of  Chicago,  manufacturing 
several  widely  advertised  package  cereals,  has  for  many 
years  maintained  the  policy  of  making  no  concessions 
in  price  upon  large  purchases.  Concessions  are  made 
upon  orders  for  5-case  lots,  because  of  freight 
advantages  in  the  latter,  but  chain  stores  and  large 
purchasers  are  not  favored  over  the  comparatively 
small  grocers,  who  are  able  to  handle  without  difficulty 
five  cases  at  a  time.  Jobbing  prices  are  quoted,  but  no 
differences  are  made  as  between  jobbers,  and  jobbers 
are  requested  to  maintain  prices  in  selling  to  retailers. 
The  buyer  of  a  group  of  chain  stores  has  asked  the  com- 
pany for  a  jobbing  price,  agreeing  to  contract  for  an 
amount  of  product  which  is  greater  than  that  used  by 
many  of  the  jobbers  with  whom  the  company  deals. 

Questions 

1.  Should  the  company  grant  this  buyer  the  jobber's 
price? 

2.  Assuming  that  the  buyer  is  not  an  organized 
chain  store,  but  represents  a  retail  buying  association 
having  a  wholesale  warehouse,  is  there  any  reason  for 
differentiating  in  price  between  the  chain  store  buyer 
having  25  stores  and  the  cooperative  buying  associa- 
tion consisting  of  25  independent  units? 

3.  A  jobber  starts  a  retail  store  in  the  outskirts  of 
the  city  in  which  his  wholesale  store  is  located. 
Should  the  Aylsworth  Company  continue  to  quote 
jobbing  prices  or  refuse  to  sell  at  jobbing  prices  to 
this  concern? 

4.  What  other  arrangements  might  be  made  to  pro- 
vide for  the  situation  without  departing  from  regular 
policy? 


380        ritOBLKMS  IN  SALES  MANAGEMENT 

PUOBLUM    1230 

JoBBKus'  Discounts 

On  what  basis  should  jobbers'  discounts  be  granted 
by  a  manufacturer  of  automobile  accessories?  The 
decision  will  frequently  depend  upon  whether  quantity 
alone  determines  the  size  of  discount  or  whether  recog- 
nized standing  as  a  jobber  is  also  required.  A  certain 
firm,  in  receiving  an  inquiry  from  a  firm  which  has  not 
handled  the  i)roduct  before,  usually  writes  as  follows: 

We  very  much  appreciate  your  iiuiuiry  for  jobbing  infor- 
mation. With  a  clearly  defined  jcjbhcr  policy  such  as  ours, 
wo  feel  that  wo  are  serving  the  l)est  interests  of  the  entire 
trade  l)y  being  extremely  careful  that  we  do  not  cpiote  jobber 
discounts  except  to  concerns  whose  status  as  jobber  in  the 
automo))ile  accessory  field  is  clearly  established  beyond  all 
reasonable  doubt. 

We  readily  admit  that  our  present  jobber  list  may  not 
contain  all  such  names,  and  therefore,  when  we  receive  such 
a  request  from  a  concern  not  on  our  list,  all  we  ask  is  an 
opportunity  to  make  our  own  investigation. 

The  enclosed  questionnaire  is  prepared  especially  for 
this  purpose,  and  we  ask  you  to  fill  it  out  and  return  it  to 
us  in  strict  confidence.  This  will  give  us  the  information 
necessary  to  pass  on  the  matter,  and  we  will  let  you  know 
the  result  as  soon  as  possi])le. 

If  the  inquiry  is  from  a  concern  which  has  been 
handling  the  manufacturer's  goods  as  a  retailer,  the 
reply  is  modified  something  as  follow^s: 

We  ver}^  much  appreciate  yotir  inquiry  for  jobbing 
information.  Your  desire  to  enter  the  jobbing  field  wdth 
our  article  pleases  us  especially,  because  it  is  unmistakable 
evidence  of  the  growth  of  your  own  V)usiness  as  well  as  your 
good  will  toward  our  product. 

We  admit  frankly  that  our  policy  in  regard  to  offering 
jobber  discounts  is  a  very  conservative  one,  and  we  believe 
it  is  for  the  best  interests  of  the  entire  trade  that  it  should 
be  so.  For  instance,  if  we  give  3'ou  the  jobber  discount 
now,  it  is  equivalent  to  taking  away  that  amount  of  business 
from  the  jobljer  from  whom  you  have  been  buying.  He 
would  naturally  have  just  cause  to  complain,  just  as  you 
would  were  positions  reversed,  unless  it  is  clearly  shown 
beyond  any  reasonable  doubt  that  you  are  entitled  to 
jobber  classification. 


SALES  METHODS  381 

For  these  reasons  we  ask  you  to  fill  out  and  return  to  us 
in  confidence  the  enclosed  questionnaire,  which  will  give  us 
the  information  necessary  to  make  an  intelligent  decision. 
We  have  every  desire  to  classify  you  as  a  jobber  if  we  can 
conscientiously  do  so. 

The  questionnaire  mentioned  in  the  foregoing  letters 
is  printed  on  one  letter-size  sheet  and  reads  as  follows: 

Name  of  concern 

Address 

City State 

Names  of  manager Buyer 

Do  you  publish  a  catalogue 

Do  you  use  a  syndicate  catalogue ; 

What  territory  do  you  cover 

How  many  travelers  selling  automobile  accessories  do 
you  employ 

How  many  months  do  they  travel 

What  was  the  total  amount  of  annual  business  in  auto- 
mobile accessories  your  last  fiscal  year 

Amount  of  last  inventory  auto  accessories 

Percentage  of  your  business  done  at  wholesale 

Do  you  send  out  any  cut-price  bargain  sheets 

Have  any  mfrs.  to  whom  you  have  applied  for  jobber's 
discounts  refused  them  to  you 

Write  below  names  and  addresses  of  at  least  six  manu- 
facturers of  national  reputation  who  now  extend  job- 
ber discounts  to  you 

Question 
Is  this  a  satisfactory  method  of  granting  jobber 
discounts? 


382        PROBLEMS  IN  SALES  MANAGEMENT 

Problem  231 
Reducing  Prices  to  Meet  Competition 

The  B.  M.  Dunn  Company,  of  Clevehuid,  Ohio, 
manufactures  builders'  tools.  Among  other  articles  it 
produces  files  of  quality  grade.  In  August,  1921,  the 
vice-i)resident  in  charge  of  sales  sent  the  following 
letter  to  the  members  of  the  board  of  directors  in 
anticipation  of  a  meeting  which  was  shortly  to  be  held. 

We  have  just  received  notice  that  Brown  has  reduced 
his  prices  on  files  12J^%.  This  reduction  probably  applies 
to  all  his  l)rands.  It  is  most  likely  that  the  other  file  makers 
will  follow  Brown  with  a  similar  reduction.  The  cjuestion 
is  what  should  we  do. 

Dunn  files  are  probably  better  than  any  other  brand 
rfiade.  Tests  such  as  those  shown  in  our  Saturday  Evening 
Post  advertisement,  June  1,  which  all  of  you  will  see,  prove 
that  Dunn  files  are  worth  at  least  50%  more  in  actual  value 
as  a  permanent  proposition.  It  will  l)e  necessary  for  us  to 
get  more  for  them  than  other  makers  get  for  theirs.  Dunn 
files  were  consistent!}'  sold  for  years  at  prices  running  about 
25%  higher  than  other  best  makes.  Last  May  we  made  a 
reduction  of  about  30%  in  our  prices  which  brought  our  files 
73/2  to  10%  l)elow  other  maker's  best  product,  but  we  made 
it  very  clear  at  the  time  that  this  reduction  was  made  in 
recognition  of  conditions  calling  for  lower  prices.  Brown 
reduced  his  prices  to  meet  ours.  Both  of  his  reductions 
together  amounted  to  only  al)out  20%,  whereas  our  single 
reduction  was  30%. 

If  we  now  made  another  reduction  of  12}^%  to  keep 
our  prices  in  line  with  Brown  we  fear  that  our  customers 
will  expect  that  this  is  to  be  our  policy,  and  the  very  fact 
that  we  put  the  files  on  the  same  price  as  Brown,  will  make 
it  harder  for  us  to  convince  buyers  that '  'they're  worth  more." 
It  occurs  to  us  that  we  can  realize  more  on  files  by  spending 
this  12^2%  to  make  the  files  more  salable,  rather  than 
giving  them  away  at  a  lower  j^rice.  The  Dunn  short  line 
has  merchandise  possibilities  that  no  other  file  line  has.  One 
idea  we  have  is  that  we  might  get  up  a  display  case  for  the 
retailer's  counter  to  contain  most  of  the  line  of  Dunn  files. 
The  case  we  have  in  mind  is  to  be  handsome,  strong,  and 
permanent.  AVe  might  make  it  of  mahogany  work  with  a 
glass  top  which  could  be  lifted  in  selling  the  file.  It  would 
contain  compartments  to  hold  a  display  of  each  of  the  45 
files.  AVe  would  i:)ropose  to  give  one  of  these  cases  to  a 
retailer  with  an  order  for  two  gross  of  Dunn  files.     Roughly 


SALES  METHODS  383 

speaking,  we  figure  that  our  price  to  the  jobber  for  two  gross 
of  files  would  be  about  $50,  and  the  case  which  we  would 
give  free  would  be  worth  about  $10.  The  jobber  would 
therefore  receive  the  files  and  the  case  combined  for  not  any 
more  nor  less  than  he  could  buy  the  files  from  Brown  in  a 
case  separately.  The  same  would  hold  true  for  the  retailer 
when  he  places  his  order.  We  would  tell  the  jobber,  and 
the  retailer  through  our  missionary  salesmen,  that  this  was 
Dunn's  second  step  in  making  files  a  merchandise  proposition 
instead  of  simply  a  competitive  commodity. 

Question 
What  action  should  the  board  of  directors  have  taken 
on  this  recommendation? 


Problem  232 
Price  Reduction 

On  a  declining  market  a  certain  shoe  manufacturer 
finds  that  he  can  reduce  prices  to  dealers  10%,  but  not 
more.  He  is  confronted  with  the  possibility  that,  if  he 
reduces  his  prices  10%,  the  retailers  will  pocket  the 
difference  in  cost  and,  as  a  result,  the  manufacturer  will 
not  feel  the  stimulation  in  sales  to  which  he  is  entitled 

Questions 
From  the  view-point  of  the  manufacturer,  which  of 
the  following  courses  of  action  would  be  advisable? 

(a)  Reduction  of  prices  10%. 

(b)  Using  the  amount  of  the  10%  reduction  in  an 
elaborate  advertising  campaign. 

(c)  Reducing  5%  and  putting  remainder  in  adver- 
tising. 


384        PROBLEMS  IN  SALES  MANAGEMENT 

Problem  233 
Price-Cutting 

A  proininciit  siiley  manager  states  that  there  are  three 
ways  of  preventing  price-cutting: 

(1)  Deahng  direct  witli  retailer; 

(2)  Granting  excKisive  agencies; 

(3)  SoHing  to  the  dealer  at  the  same  price,  whether 
the  order  is  for  a  large  or  a  small  quantity. 

Questions 
Is  any  one  of  these  plans  suitable  for  a  manufac- 
turer of 

(a)  Silk  dress  goods. 

(6)  Prepared  cereals. 

(c)  Advertised  line  of  hosiery. 

(d)  Electrical  household  devices. 

(e)  Laundry  soap  (small  manufacturer). 


Problem  234 
Meeting  Competition  of  Inferior  Goods 

The  LaSalle  JNIanufacturing  Company,  of  Chicago 
and  New  York,  leading  manufacturers  of  work  shirts, 
have  found  that  during  the  past  year  there  has  been  a 
growing  tendency  for  jobbers  handling  their  lines  to 
handle  job-lot,  broken  merchandise  selling  at  much 
lower  than  their  prices  and  sold  upon  the  basis  purely 
of  price  and  not  upon  quality.  Jobbers  in  the  past  10 
or  15  years  have  built  up  the  trade  in  the  better 
grade  of  work  shirts. 

The  LaSalle  Company's  product  is  sold  on  the 
quality  basis,  and  it  is  impossible  for  the  company  to 
meet  the  prices  which  are  being  quoted  on  many  of  the 


SALES  METHODS  385 

job-lots  of  inferior  goods  now  offered  by  manufacturers 
who  are  not  advertising  a  trade-marked  line  of  work 
shirts.  More  specifically,  the  LaSalle  Company  finds 
that  its  sales  are  falling  off,  in  spite  of  the  fact  that 
every  advantage  in  reduction  of  raw  material  and  labor 
has  been  passed  on  to  the  jobber. 
Several  suggestions  are  offered: 

(a)  Revision  of  prices  involving  losses  which  can- 
not be  continued  for  more  than  a  few  months. 

(b)  Producing  inferior  garments  to  meet  prices. 

(c)  Increasing  sales  efforts,  probably  at  increased 
selling  costs. 

Question 
Which,  if  any,  should  be  adopted? 


Problem  235 
Wholesale  Grocers  and  Competition  of  Chain  Stores 

The  secretary  of  a  state  wholesale  grocers'  association 
issued  a  circular  letter  to  members  of  the  association 
advocating  the  plan  of  establishment  of  chain  stores 
by  wholesale  grocers.  The  claim  is  made  that  the 
chain  store  does  not  supplant  the  wholesaler  for  the 
less  desirable  element  of  foodstuffs  distribution.  The 
circular  letter,  as  quoted  from  the  Journal  of  Commerce, 
is  as  follows : 

Leaving  all  other  claimed  savings  out  of  consideration, 
let  us  study  the  chain  store  from  the  viewpoint  of  whether 
the  chain  store  has  effected  a  saving  in  the  distribution  of 
foodstuffs  by  the  substitution  of  its  method  of  doing  business 
for  the  older  method  of  the  wholesale  grocer.  An  examina- 
tion of  this  will  absolutely  prove  that  it  has  not. 

The  wholesale  grocer  uses  salesmen  to  call  on  his  cus- 
tomers.    The  chain  store  has  eliminated  salesmen,  but  has 


88G        PROBLEMS  IN  SALES  MANAGEMENT 

substituti'il  ill  phu't'  ul  this  expense  the  store  inspector. 
There  may  be  a  fractional  savinji;  here,  but  it  is  fractional  on 
the  volume  of  business  and  is  almost  insignificant. 

The  chain  store  has  reduced  none  of  the  other  expense 
incident  to  the  wholesale  grocery  business,  and  has  the  same 
overhead  that  the  wholesale  grocer  has  in  serving  entirely 
its  50  to  loO  or  more  customers  (its  branch  store)  that  the 
wholesale  grocer  has  in  partly  supi)lying  his  500  to  1000  or 
more  customers. 

Th(>  jol)ber  has  bad  del)ts,  which  have  lately  been  quite 
a  disquieting  item,  while  against  this  the  chain  store  has  the 
expense  of  a  stoi'e  which  it  operates  unpi'ofitably  and  per- 
haps has  to  close,  and  the  chances  of  thefts  by  its  employees 
and  others  in  its  branches. 

Where  then  is  the  saving?  It  lies  in  the  retail  end  of 
the  operation  entirely.  It  lies  in  the  elimination  of  the 
credit  risk,  the  elimination  in  many  instances,  of  all  service 
and  in  placing  stores  only  in  thickly  populated  centers, 
thereby  not  having  to  average  profitable  business  against 
less  profitable.  For,  it  must  be  remembered,  that  chain 
stores  do  not  serve  all  the  people,  but  only  a  part;  that  no 
system  has  yet  been  devised  which  can  operate  successfully 
where  the  population  is  very  sparse.  With  our  older  method 
of  distribution  it  was  necessary  for  the  wholesale  grocer  to 
charge,  consciously  or  unconsciously,  a  percentage  of  the 
cost  of  doing  lousiness  in  the  less  populous  territory  against 
the  cost  of  doing  ])usiness  in  the  territory  with  the  larger 
population. 

We  have,  therefore,  reached  the  point  where  we  find 
the  large  part  of  the  success  of  the  chain  store — the  large 
part  of  the  saving  of  the  chain  store — is  for  the  benefit  of 
the  people  in  the  congested  sections  at  the  expense  of  the 
people  in  the  thinly  populated  areas.  If  we  are  to  continue 
under  the  present  methods — making  no  radical  changes  to 
meet  these  conditions- — then  the  wholesale  grocer  of  the 
future,  and  the  near  future  at  that,  will  be  largely  dependent 
on  the  country  for  his  business,  and  the  country  will  have 
to  pay  excessively  for  this  service  because  of  the  reduced 
volume  and  because  the  city  dwellers  are  getting  the  benefit 
of  the  higher  prices  in  the  country. 

But  this  is  not  right,  and  there  nnist  be  some  method  to 
overcome  it. 

After  giving  the  matter  our  best  thought,  and  after 
studying  it  from  all  angles,  we  see  only  one  solution — 
provided  the  chain  store  is  to  become  a  recognized  factor  in 
distribution  of  food  stuffs,  and  is  to  receive  the  buying 
privileges  it  demands — to  eliminate  the  abuses  of  the  present 


SALES  METHODS  387 

system,  and  save  the  country  folk  from  having  to  pay 
exorbitant  prices  for  their  supplies. 

We  do  not  say  that  our  solution  which  is  built  on  the 
hypothesis  that  we  assumed  at  the  beginning  is  the  correct 
one,  but  after  much  thought  it  is  to  us  the  most  logical  that 
we  can  find  to  enable  the  wholesale  grocer  to  continue 
serving  the  people  as  he  has  in  the  past. 

The  chain  store's  weakness  is  in  spreading  out.  As  long 
as  it  confines  its  operations  to  one  city,  under  its  present 
special  privilege,  it  is  almost  impregnable,  provided,  of 
course,  it  is  well  managed. 

In  their  anxiety  to  do  a  larger  and  larger  volume,  in  their 
anxiety  to  control  the  whole  situation,  many  chain  stores  are 
opening  branches  further  and  further  away  from  their  bases 
and  each  branch  instead  of  strengthening  is  weakening  their 
organization. 

The  logical  operators  of  chain  stores  are  our  present 
wholesale  grocers.  They  should  continue  to  be  wholesale 
grocers,  not  chain  stores,  but  should  have  chain  stores  in 
their  own  home  markets.  They  then  could  continue  to  get 
their  volume  in  their  home  market,  and  this  volume  would 
be  certain,  on  a  profitable  basis,  while  at  the  same  time, 
because  of  this  volume  at  home  they  would  be  enabled  to 
fulfill  their  obligation  to  society  by  serving  the  country  even 
better  than  before. 

The  country  would  not  have  to  pay  exorbitantly  for  the 
city's  privilege  of  having  the  chain  store,  and  the  wholesale 
grocers'  present  plants,  with  all  their  machinery  for  han- 
dling this  class  of  business,  would  be  amply  sufficient  to 
handle  it  in  this  way. 

There  are  many  savings  which  would  come  to  the 
wholesale  grocer  by  his  making  this  change.  His  trucking 
expense  could  be  greatly  reduced,  as  he  would  know  exactly 
where  his  trucks  would  have  to  go  each  day,  and  he  could 
adopt  "sidewalk  delivery"  to  his  own  stores.  His  buying 
powers  would  be  greater,  and  his  outlet  for  selling  his  stock 
would  be  much  improved,  as  it  is  a  fact  that  goods  displayed 
in  the  retail  store  are  half  sold.  His  turnover  would  be 
greatly  increased,  and  in  many  other  ways  he  would  reap  a 
benefit. 

To  us,  therefore — granting  the  chain  store,  with  special 
privilege  has  come  to  stay — the  logical  and  only  method  of 
working  for  the  best  interest  of  the  pulilic  seems  to  be  that 
the  wholesale  grocer  should  own  and  operate  a  system  of 
chain  stores  in  his  home  market,  if  it  is  large  enough  to  justify 
it,  and  at  the  same  time  continue  to  serve  his  other  customers 
to  better  advantage  than  before. 


388       PROBLEMS  IN  SALES  MANAGEMENT 

The  Stuart  WliolcsaU*  ( rrocory  Coiiipany,  located  in 
Philadelphia,  was  founded  in  1815.  During  the  cen- 
tury or  more  of  its  existence,  there  has  always  been  a 
member  of  the  original  famil}^  at  the  head  of  the  busi- 
ness. The  company  buys  from  more  than  500  pro- 
ducers and  manufacturers,  has  a  private  brand  in  which 
the  quality  has  been  constantly  maintained.  About 
10%  of  its  goods  are  imported,  particularly  teas,  coffees, 
spices,  and  c(M-tain  fancy  groceries.  The  business  in 
1920  was  §3,500,000.  There  are  three  branches  in  the 
larger  jobbing  centers  in  the  vicinity  of  Philadelphia. 
The  company  sells  to  about  3,500  retail  grocers.  It  has 
been  very  much  opposed  to  price-cutting. 

Recently  the  members  of  the  firm  have  viewed  with 
growing  alarm  the  very  widespread  development  of  the 
chain-store  grocery  business  in  Philadelphia.  They 
realize  that  there  is  probably  no  city  in  the  country  in 
which  chain  stores  do  a  larger  proportion  of  the  city's 
grocery  "business.  These  and  other  chains  have  ex- 
tended to  smaller  cities  and  even  to  the  towns  in  which 
many  of  the  customers  of  the  wholesaler  reside.  Fur- 
thermore, the  company  finds  that  independent  grocers 
are  combining  in  cooperative  buying  organizations  with 
the  intention  of  going  direct  to  the  manufacturer  and 
eUminating  the  wholesaler.  One  association  of  grocers 
has  a  central  warehouse  and  purchases  are  made  from 
manufacturers  in  lots  sufficiently  large  to  give  them 
jobbing  prices.  While  the  policy  of  the  Stuart  Com- 
pany has  ahvaj's  been  conser\'ative  with  respect  to 
annual  increase  in  volume  of  business,  the  company 
fears  the  prospects  of  dechne  in  sale  due  to  the  newer 
forms  of  competition. 

Question 
Should  the  Stuart  Company  establish  retail  stores  as 
a  means  of  meeting  competitors? 


I 


SALES  METHODS  389 

Problem  230 
Retaining  Dealer  Good  Will  When  Reducing  Prices 

During  the  first  week  in  March,  1921,  the  Columbia 
Graphophone  Company  used  large  advertising  space  in 
daily  papers  of  various  cities  of  the  country  to  advertise 
a  reduction  in  prices  of  the  various  models.  The 
reductions  were  as  follows: 


[ODELS 

Present  Prices 

New  Pric 

*101 

$275.00 

$175.00 

*102 

225.00 

150.00 

*103 

165.00 

140.00 

*104 

150.00 

125.00 

*105 

140.00 

100.00 

*106 

125.00 

75.00 

*107 

75.00 

60.00 

*108 

50.00 

45.00 

*109 

32.50 

30.00 

Questions 

1.  Assuming  that  the  company  does  not  adopt  the 
policy  of  protecting  dealers  from  loss  on  stocks  on  hand 
when  price  reduction  was  announced,  what  arguments 
should  the  company  use  to  persuade  dealers  to  continue 
to  push  the  product? 

2.  Write  a  letter  to  the  dealers  explaining  reasons 
for  new  prices  in  an  attempt  to  retain  the  good  will  of 
dealers  during  period  of  readjustment. 

3.  If  adjustments  are  to  be  made,  how  should  they 
be  handled? 


390       IMtoBLEMS  IN  SALES  MANAGEMENT 

I'UOMLKM    237 

Meeting  Competition  of  Cooperative  Producing 
Organization 

During  l'J2U  it  was  announced  that  the  United 
Brotherhood  of  Maintenance  of  Way  Employees  and 
Shop  Laborers  had  purohasc^d  the  canvas  jrlove  factory 
of  Bacon  Brothers,  at  Toledo,  Ohio,  and  had  turned  its 
entire  facilities  to  the  making  of  work  gloves  for  the 
members  of  this  railway  union.  Factories  are  already 
operated  by  the  Brotherhood  in  two  Michigan  cities, 
where  overalls,  underwear,  gloves  and  hosiery  are 
made  to  sell  to  members  at  cost.  A  saving  of  35%  to 
60%  over  prevailing  prices  is  claimed.  In  gloves  alone 
these  factories  will  have  a  productive  capacity  of 
24,000,000  pairs  per  year. 

Members  of  other  brotherhoods  are  also  permitted  to 
purchase  from  the  union-owned  factories.  Cooperative 
factory-made  goods  are  sold  to  members  through  mail- 
order retail  stores. 

Question 
What  steps,  if  any,  should  a  canvas  glove  manufac- 
turer take  to  meet  this  competition? 


Problem  238 
Meeting  Competition  of  Substitutes 

The  American  Laundry  ^Machinery  Company  manu- 
factures a  complete  line  of  machinery  for  installation 
in  steam  laundries.  The  activity  of  manufacturers  of 
electric  washing-machines  for  the  home  has  resulted  in 
increasing  the  amount  of  washing  done  at  home. 

Question 
What  should  the  company  do? 


SALES  METHODS  391 

Problem  239 
Broken  Package  RoOxM 

The  Federal  Wliolesale  Grocery  Company,  located  in 
New  York  City,  had  annual  sales  amounting  to  approx- 
imately $7,000,000  in  1920.  The  Company's  operating 
expenses  for  that  year  were  8.5%  of  net  sales  and  the 
gross  profit  9%.  The  company  did  a  large  volume  of 
business  in  staple  and  medium-priced  groceries.  Its 
sales  had  been  confined  to  three  main  groups  of  cus- 
tomers ;  local  retailers,  retailers  in  many  parts  of  the 
United  States  outside  of  the  local  districts,  and  hotels, 
steamships,  and  institutions. 

Although  during  the  10  years  previous  the  sales  of 
this  company  had  heavily  increased,  the  sales  to  local 
retailers,  which  in  1920  amounted  to  about  one-fourth 
of  the  total  business,  had  increased  only  in  proportion 
to  the  increase  in  prices.  In  other  words,  the  physical 
volume  of  sales  to  local  retailers  had  remained  prac- 
tically constant. 

In  the  opinion  of  Mr.  John  Barber,  the  sales  man- 
ager, the  best  prospects  during  1921  and  succeeding 
years  for  increasing  sales  lay  in  developing  the  trade 
with  the  local  retailers.  Although  the  sales  to  outside 
retailers  had  shown  greater  increase,  he  considered  that 
the  hmit  had  nearly  been  reached  for  such  sales,  as 
freight  rates  constituted  a  serious  obstacle  in  selling  to 
the  retailers  outside  of  the  local  district.  The  compe- 
tition for  the  hotel,  steamship,  and  institution  trade 
had  become  extremely  keen,  and  Mr.  Barber  did  not 
think  it  possible  for  the  company  to  expand  this  trade 
at  a  rapid  rate.  His  sales  to  this  group  amounted  to 
approximately  50%  of  the  total  sales  of  the  company. 

Numerous  unit  stores  had  been  opened  in  the  local 
territory  of  the  Federal  Wholesale  Grocery  Company, 
and  some  of  the  local  merchants  had  opened  branch 
stores.  Mr.  Barber's  selling  organization  had  not  made 
any  specific  drive  on  many  of  the  financially  sound 
retail  stores  in  the  local  territory. 

On  investigating  the  possibilities  of  developing  the 
local  trade  Mr.  Barber  found  that  one  of  his  com- 


■M\2        PHOIU.KMS  IN  SALES  ^MANAGEMENT 

petitors,  who  did  a  larfj^e  local  business,  operated  a 
broken  packaji;^  room.  This  comiiotitor's  volume  of 
sales  was  slightly  less  than  .S;i,()()()^()()()  a  year. 

Later  Mr.  Barber  learned  that  the  Harvard  Bureau 
of  Business  Researeh  had  made  a  preliminary  investiga- 
tion of  broken  i:>ackage  rooms.  The  following  report 
was  pubhshed  in  one  of  its  bulletins: 

Seventy-one  wholesale  grocers  stated  that  they  had  a 
broken  package  room.  Twenty-nine  stated  that  they  did 
not  have  a  broken  package  room.  The  firms  reporting  that 
they  were  not  operating  a  l^rokcn  package  room  generally 
had  a  volume  of  sales  less  than  S1,0()().()()()  in  1919.  Three- 
fourths  of  the  firms  that  were  operating  a  i)roken  package 
room,  on  the  other  hand,  had  sales  of  more  than  SI, 000, 000 
each  in  1919.  The  expense  for  wages  of  receiving,  handling, 
and  shipping  force  was  slightly  higher  in  the  case  of  firms 
operating  a  broken  package  room  than  for  those  firms  that 
did  not  follow  this  policy.  The  difference  in  total  receiving, 
handling,  and  shipping  expense  between  these  two  groups 
was  about  one-fourth  of  one  per  cent  of  net  sales.  The 
number  of  employees  in  a  broken  package  room  was  generally 
one  or  two.  The  largest  mun])cr  was  twenty-one,  but  only 
two  firms  liad  more  than  five  each. 

A  comparison  of  the  rate  of  stock-turn  in  these  two 
groups  of  businesses  was  made,  but  it  did  not  show  con- 
clusively that  there  is  a  substantial  difference  in  the  rate  of 
stock-turn  whether  or  not  a  broken  package  room  is  operated. 
Numerous  firms  operating  a  broken  package  room  had  a 
high  rate  of  stock-turn,  and  it  appears  that  other  policies 
of  management  have  more  to  do  with  the  rate  of  stock-turn 
than  the  policy  toward  a  broken  package  room. 

Question 
Should  Mr.  Barber  have  installed  a  broken  package 
room  in  order  to  increase  his  sales  in  the  local  territory? 


SALES  METHODS  393 

Problem  240 

Disposition  of  Surplus  Stocks 

(a)  The  Stratton  Company  has  its  own  chain  of  job- 
bing branches  deahng  with  retailers.  The  company's 
plan  of  operation  calls  for  canvas  footwear  stock  on 
September  1  in  these  branches  to  be  S500,000.  This  is 
scheduled  as  the  date  of  price  change.  Further,  fall 
shipments  to  dealers  are  customarily  made  at  this  time 
on  the  basis  of  orders  taken  earlier  in  the  year.  If  ship- 
ments are  not  made  soon  after  September  1,  they  must 
usually  beheld  over  until  February  of  the  following  year. 
At  this  time,  the  indications  are  that  the  change  in 
price  on  September  1  will  be  in  the  direction  of  a  reduc- 
tion of  from  15  to  20%.  Knowing  this,  retailers  tend 
to  buy  from  hand  to  mouth  in  the  six  weeks  preceding ; 
inventory  August  1  shows  an  increase  due  to  delayed 
purchasing. 

Questions 

1.  What  should  the  company  do  to  dispose  of  this 
large  stock  of  canvas  footwear,  w^hich  might  be  left  in 
its  branch  warehouses? 

2.  To  sell  at  a  reduced  price  would  tend  to  demor- 
alize the  market.  Should  they  carry  the  goods  over, 
taking  the  decline  in  value  and  assuming  carrying 
charges? 


(6)  In  the  factory-made  clothing  industry  there  is 
also  a  very  important  problem  connected  with  goods 
left  in  the  hands  of  the  manufacturer  at  the  end  of  the 
season.  If  the  manufacturer  has  misjudged  the  style 
trend  as  to  fabric  or  cut,  he  may  find  himself  with  a 
large  stock  at  the  end  of  the  season,  which  it  is  necessary 
for  him  to  dispose  of  as  quickly  as  possible  in  order  to 


394        PROBLEMS  IN  SALES  MANAGEMENT 

avoid  still  larger  loss.  Likewise,  the  stock  of  left-over 
goods  is  iiicroiiscd  l)y  caiici'lations  and  returns,  which 
sccni  to  have  hocn  a  perennial  afllictiou  of  the  clothing 
manufacturer.  Most  manufacturers  are  compelled  to 
work  off  these  left-()V(Ts  (or  what  threaten  to  he  left- 
overs) by  selling  through  the  regular  season  and  as  early 
in  the  season  as  possible.  Wherever  it  is  the  judgment 
of  the  manufacturer  that  styles  will  be  repeated  during 
the  coming  season,  left-overs  are  carried  over  and  sold 
at  prevailing  prices  during  the  following  season.  Ship- 
ping goods  on  consignment  is  one  method  of  disposing, 
of  left-overs.  The  customer  is  requested  to  accept  the 
shipment,  sell  as  much  as  possible,  and  return  to  the 
factory  such  goods  as  cannot  he  disposed  of.  Some- 
times a  minimum  price  is  fixed  below  which  no  goods 
may  be  sold.  Jobbers,  mail-order  houses,  and  certain 
stores  in  almost  every  city  make  a  practice  of  buying 
large  quantities  of  left-over  stock  at  the  end  of  the 
season.  Department  stores  are  said  to  be  generally  in 
the  market,  but  demand  reduced  prices.  Such  pur- 
chases are  made  the  basis  of  end-of-the-season  sales, 
particularly  where  normal  stocks  of  the  retail  concern 
are  much  depleted.  Left-over  goods  must  usually  be 
sold  at  a  considerable  sacrifice,  varying  from  one-third 
to  one-half  below  established  prices. 

Questions 

1.  Is  consignment  the  only  solution? 

2.  Is  it  possible  to  avoid  left-overs? 


SALES  METHODS  395 

Problem  241 
Auction  Method  of  Disposing  of  Surplus  Stocks 

In  February,  1921,  Smith  &  Company,  as  selling 
agents  and  controlling  factors  in  the  Amherst  Mills, 
which  manufacture  hosiery  exclusively,  found  them- 
selves with  a  surplus  of  some  5,000  cases  of  first-quality 
goods,  each  case  containing  30  to  60  dozen  2-thread  lisle 
and  mercerized  hosiery,  both  men's  and  women's.  It 
was  proposed  that  an  auction  be  arranged  to  dispose  of 
this  stock.  As  far  as  possible  financial  loss  is  concerned, 
the  company  feels  able  to  stand  it. 

Questions 

1.  Under  the  circumstances,  is  an  auction  advisable 
from  the  view-point  of  retaining  good  will  of  present 
distributors? 

2.  If  an  auction  should  be  decided  upon,  what  credit 
terms  should  be  granted? 


Problem  242 

Follow-Up  Letters  to  Correlate  Advertising  and 

Personal  Salesmanship 

The  Harrison  Company  for  many  years  manufac- 
tured a  well-known  line  of  toilet  preparations,  of  which 
a  trade-marked  face  powder  has  been  advertised  in  the 
past  and  is  in  demand  particularly  among  older  women. 
Through  competition  the  price  of  this  powder,  supposed 
to  be  25  cents,  was  driven  down  to  15  cents.  It  was  felt 
that  national  advertising  was  necessary  to  create  de- 
mand among  young  women,  but  that  advertising 
directed  specifically  to  this  powder  would  not  help 
the  price-cutting  situation. 


390        PROBT.EIMS  IN  SALES  MANAGEMENT 

Consequently,  tlic  coiiipany  started  to  advertise  a 
new  brand  in  a  nnnv  cxixMisivr  i)()\vd(M'  selling  for  50 
cents.  Witli  a  ('())ni)arativ('ly  small  ai)i)r()i)riation,  to- 
gether with  a  strong-  (luality  appeal  in  copy,  national 
distribution  was  achieved  in  less  tlian  a  year.  Like- 
wise, as  was  hoped,  the  new  i)()wder  helped  the  sale  of 
the  old  and  pushed  up  its  price. 

Although  the  concern  has  a  corps  of  salesmen  calling 
upon  retailers,  all  orders  are  credited  to  jobbers  and 
goods  are  distributed  through  the  latter.  One  of  the 
prime  functions  of  the  salesman  is  to  drive  home  to  the 
dealer  the  value  of  the  company's  advertising.  Sales- 
men are  provided  with  a  portfolio  containing  repro- 
ductions of  the  advertisements  to  present  to  dealers, 
and  less  comprehensive  portfolios  have  been  mailed  to 
the  trade  all  over  the  country. 

The  sales  manager  feels  that  the  efforts  of  salesmen 
should  be  backed  up  by  a  mail  campaign  and  has 
decided  that  three  follow-up  letters  should  be  written 
after  portfolios  have  been  mailed.  It  seems  to  him 
that  the  letters  should  contain  reference  to  the  following 
points :  advantages  of  new  powder,  its  profits,  how  ad- 
vertising helps,  offer  of  glass  sign,  statement  as  to 
doubling  of  advertising  campaign,  etc. 

Question 
Prepare  three  letters  which  might  be  used  for  this 
purpose. 


SALES  METHODS  397 

Problem  243 
Methods  of  Avoiding  Loss  from  Obsolescence 

The  Holden  Graphophone  Company,  of  Cleveland, 
Ohio,  is  a  large  manufacturer  and  distributor  of 
graphophones  and  graphophone  records.  This  com- 
pany specializes  on  the  records  of  popular  music; 
approximately  85%  of  its  records  are  of  this  type. 
The  records  are  distributed  through  a  group  of  selected, 
exclusive  agents.  It  is  the  policy  of  the  company  to 
induce  agents,  insofar  as  it  is  legally  possible,  to  main- 
tain a  standard  resale  price.  Inasmuch  as  the  distribu- 
tion is  through  exclusive  dealers,  such  a  policy  has  been 
successfully  carried  out. 

The  life  of  any  popular  piece  of  music  is  compara- 
tively short;  after  the  public  demand  for  a  popular 
song  has  died  out,  it  is  very  difficult  to  dispose  of  a 
record  bearing  that  piece. 

Questions 

1.  What  measures  should  be  taken  by  the  Holden 
Company  to  protect  dealers  from  loss  from  obsolete 
records? 

2.  What  measures  could  be  taken  to  prevent  the 
loss  incurred  from  the  production  of  records  beyond 
the  public  demand? 


398        PROBLEMS  IN  SALES  MANAGEMENT 

PliOliLEM    244 

Claims  and  Allowances* 

It  liupixMis  not  infrequently  that  goods  are  lost  or 
danuif:;('(l  in  transit  l)etween  jobber  or  manufacturer 
and  retailer.  ( 'lainis  for  such  loss  or  damage  are 
usually  made  in  three  ways: 

(1)  Customers  make  their  own  claims,  furnishing  all 
necessary  papers  and  carrying  on  correspondence 
independently ; 

(2)  The  jobber  or  manufacturer  furnishes  all  neces- 
sary papers,  carries  on  the  correspondence,  and  files 
the  claim  for  the  customers'  account  without,  however, 
crediting  the  customer's  ledger  account; 

(3)  The  jobber  makes  the  claim  for  his  own  account, 
crediting  the  customer's  ledger  account  with  the  loss 
or  damage  claimed;  under  such  a  plan  the  duty  of  the 
customer  does  not  extend  beyond  having  the  freight 
receipt  provided  with  a  notation  "In  bad  order," 
signed  by  the  local  agent. 

In  the  wholesale  grocery  business,  the  custom  of 
having  the  customer  handle  the  entire  transaction 
himself  is  uncommon,  because  for  various  reasons  it. 
has  become  the  custom  in  certain  parts  of  the  country 
for  grocery  wholesalers  to  handle  all  the  details  for 
the  retail  customer  and  frequently  to  credit  the  retailer's 
account  upon  presentation  of  the  claim  and  freight 
receipt  with  notation.  The  following  are  typical 
opinions  on  this  policy : 

A  large  western  grocery  concern; 

We  have  for  many  years  performed  this  service  for  our 
customers  and  do  not  believe  it  is  very  burdensome.  In 
fact,  we  look  upon  it  as  a  necessary  part  of  the  service  which 
the  wholesaler  must  do  for  the  retailer,  principally  because 
we  are  so  much  better  equipped  to  handle  this  work  than  the 
retailer. 

*  Bulletin  National  Wholesale  Grocers'  Association. 


SALES  METHODS  399 

A  South  Dakota  wholesaler : 

All  jobbers  no  doubt  will  acknowledge  that  it  is  a  burden 
to  make  claims  for  the  retail  grocer,  but  I  cannot  see  how 
they  can  get  away  from  it.  The  average  retail  grocer  is  not 
prepared  to  file  his  claim;  and,  if  he  does  file  it,  he  keeps  no 
record.  The  retail  grocer,  as  a  rule,  needs  help  and  this  is 
one  of  the  ways  the  jobber  can  assist  him, 

A  New  Orleans  jobber: 

We  consider  this  practice  expensive  and  burdensome  to 
wholesalers.  We  ourselves  are  actively  doing  it,  notwith- 
standing the  fact  that  we  have  been  trying  for  the  past 
eighteen  months  to  get  away  from  it.  The  retail  trade  has 
been  educated  to  the  fact  by  inferior  salesmen  that  they 
need  not  pay  for  goods  lost  in  transit.  Of  course,  if  the 
wholesaler  intends  to  keep  the  good  will  of  his  customers, 
he  must  necessarily  file  a  claim  for  his  account  for  self- 
protection. 

A  Michigan  company: 

We  discontinued  this  practice  two  years  ago.  We 
found  it  caused  considerable  work  in  our  office,  tied  up  more 
or  less  money  in  our  book  accounts,  as  our  customers  expected 
credit  when  they  filed  claims  and  would  not  wait  for  the 
railroad  company  to  reimburse  us.  We  had  several  claims 
returned  V)ecause  the  goods  had  sul^sequently  been  delivered. 
We  also  felt  that,  if  the  customer  gave  his  own  claim,  it 
would  give  him  a  better  conception  of  what  transportation  is. 
At  first,  we  had  some  trouble,  but  as  all  jobbers  in  Michigan 
have  taken  the  same  stand  this  is  now  accepted  as  a  part  of 
the  retailer's  responsibility  and  has  worked  out  to  the 
advantage  of  all  concerned. 

An  Iowa  wholesale  grocer: 

I  will  admit  that  filing  claims  for  customers  is  somewhat 
burdensome.  However,  we  have  tried  it  both  ways.  The 
jobbers  in  our  section  tried  to  eliminate  this  practice,  but 
found  that  the  troubles  and  annoyances  were  so  great  and 
added  so  much  more  to  the  retailer's  troubles  that  we  went 
back  to  the  filing  of  these  claims  and  making  the  adjustments 
accordingly  with  the  retailers  interested. 

A  St.  Louis  jobber: 

Filing  claims  is  one  of  the  greatest  annoyances  that  has 
crept  into  wholesale  grocery  business.  We  do  not  think 
it  can  be  remedied,  as  wholesale  grocers  in  general  are  not 
always  honest  toward  one  another.     If  we  should  agree  to 


400        I'liOBLEMS  IN  SALES  MANAGEMENT 

cut  this  out,  tlicic  arc  ii  few  wlio  would  do  otherwise  in  order 
to  (ilitain  a  customer. 

Another  wholesaler: 

In  our  opinion,  the  practice  of  filing  chiinis  for  retailers 
is  wronji;  in  principle.  However,  for  a  }ioo(l  many  years  we 
have  l)een  doin^  this.  Retail  {grocers  in  small  towns  do  not 
seem  to  understand  how  to  file  claims,  even  tliou<ih  th(»y  are 
told,  and  it  is  nnich  better  for  j(ji)l)ers  to  file  these  claims  in 
their  own  offices  than  to  have  customers  iiold  up  claims  on 
siiortages.  For  this  reason,  we  insi.st  upon  our  traveling 
men  K^'tting  freiglit  bills  with  proper  shortage  notices 
whenever  bills  are  short  or  reach  customers  in  bad  order. 
Then  the  accounts  are  credited  and  the  claims  filed. 

Questions 

1.  \Miat  policy  should  a  manufacturer  of  breakfast 
food,  adopt  with  reference  to  claims  for  shortage? 

2.  In  case  of  drop  shipments  sold  direct? 


Problem  245 
Customer  Relationship — Cancelations 

The  Dundee  Company  manufactures  a  complete  line 
of  tags,  fancy  boxes,  and  paper  specialties.  Mr. 
Schmidt,  a  jeweler,  has  for  j^ears  been  a  small  customer 
of  the  compaii}'.  In  April,  1921,  he  placed  an  order 
for  SI 00  worth  of  jewelry  boxes.  The  order  called  for 
the  printing  of  the  customer's  name  in  gilt  letters  on 
the  covers  of  the  boxes,  both  inside  and  out.  Mr. 
Schmidt  was  promised  delivery'  the  middle  of  May, 
but  through  some  difficulty  the  boxes  were  not  shipped 
until  the  first  week  in  June.  On  June  20,  the  sales 
manager  received  a  letter  from  the  customer  in  which 
he  expressed  great  displeasure  at  the  way  he  had  been 
treated,  and  stated  that  he  had  sent  the  boxes  back. 


SALES  METHODS  401 

At  the  same  time,  the  sales  manager  received  notice 
from  the  receiving  room  that  the  shipment  had  come 
back  and  was  awaiting  his  action. 

The  policy  of  the  Dundee  Company  is  to  accept  no 
cancelation  except  in  those  cases  in  which  the  mer- 
chandise is  not  satisfactory  or  the  company  is  clearly 
at  fault. 

Question 

What  should  the  sales  manager  do  in  this  case? 


Problem  246 
Customer  Relationship — Cancelations 

J.  F.  Jones,  a  hardware  wholesaler,  has  been  a 
steady  customer  of  the  Londes  Company,  manufac- 
turers of  tags  and  paper  specialties,  for  a  number  of 
years,  though  his  purchases  have  never  been  large. 
In  June,  1921,  he  placed  an  order  with  a  salesman  for 
about  $75  worth  of  merchandise.  Included  in  the 
order  was  an  item  for  1,000  shipping  labels.  These 
were  a  gummed  label  bearing  Mr.  Jones'  name.  They 
were  listed  in  the  catalog  and  sold  on  this  order  at 
$8  a  thousand. 

In  making  up  the  order  the  company  made  a 
mistake  and  printed  2,000  labels,  which  were  billed  and 
shipped  to  the  customer.  Immediately  the  manage- 
ment received  notice  from  Mr.  Jones  that  more  labels 
had  been  shipped  than  were  ordered.  Furthermore, 
he  found  that  he  could  get  labels  which  would  suit  his 
purpose  from  a  competitor  of  the  Londes  Company  for 
S2.25  a  thousand.  He  expressed  the  opinion  that  he 
was  being  overcharged  and  said  that  he  would  return 
the  labels  unless  the  company  was  willing  to  give  him 


402        PROBLEMS  IN  SALES  MANAGEMENT 

the  saiiio  ])ric'o  as  tlic   fompetitor.     In  this  case  he 
would  take  the  2,000  labels. 

The  policy  of  the  Loiidcs  Company  has  been  to 
accept  no  cancelations  excei)t  in  those  cases  in  which 
the  fault  lies  with  the  company.  It  has  been  successful 
in  closely  adhoriiifi;  to  this  program  and  has  been  able 
to  hold  the  good  will  of  its  customers. 

Question 
What  should  the  sales  manager  do? 


Problem  247 
Relations  with  Competitors 

(a)  Two  manufacturing  drug  concerns  have  adopted 
different  plans  of  selling  their  goods.  Wood,  Durand 
&  Company  sell  through  their  own  salesmen  both  to 
large  retailers  and  to  jobbers.  On  the  other  hand,  the 
Davis  &  Cox  Company,  a  firm  almost  as  large,  sells 
only  to  selected  jobbers,  but  it  maintains  a  sales  force 
of  about  300  men  to  call  upon  medical  men  and  retailers 
in  order  to  stimulate  the  sale  of  the  company's  products. 
Every  salesman  of  the  Davis  &  Cox  Company  must  be 
either  a  graduate  physician  or  a  registered  pharmacist. 

Questions 

(1)  Assuming  selling  costs  of  the  two  firms  to  be  ap- 
proximately equal,  which  is  the  better  method? 

(2)  What  arguments  can  the  Davis  ik  Cox  Company 
offer  the  retailer,  who  would  rather  deal  directly  with 
the  manufacturer,  when  he  finds  that  he  must  order 
through  the  jobber? 


SALES  METHODS  403 

(h)  One  of  the  customers  of  the  Davis  &  Cox  Com- 
pany is  the  Jones  Wholesale  Drug  Company.  The 
standard  of  compensation  of  the  Davis  &  Cox  Com- 
pany for  its  trade  salesmen  is  slightly  higher  than  that 
of  the  Jones  Company  for  those  salesmen  who  call  on 
the  same  trade.  The  star  salesman  of  the  Jones  Com- 
pany applied  in  writing  to  the  Davis  &  Cox  Company 
for  a  position  as  salesman. 

Questions 

1.  What  should  be  the  reply  of  the  latter? 

2.  Under  what  circumstances,  if  any,  should  the 
manager  of  the  company  consider  the  application? 

3.  If  it  should  consider  the  application,  what  atti- 
tude should  be  taken  toward  advising  the  Jones  Com- 
pany of  its  intentions? 


Problem  248 
Coordination  of  Sales  and  Production 

The  Penn  Paper  Box  Company  is  located  in  one  of 
the  suburbs  of  Philadelphia.  Its  product  consists 
almost  entirely  of  small  cardboard  boxes  used  as  con- 
tainers for  various  kinds  of  package  goods.  For  exam- 
ple, among  its  products  at  the  present  time  are  candy 
boxes,  soap  containers,  packages  for  tea  and  coffee,  and 
boxes  of  various  sizes  for  different  kinds  of  dry-goods. 
Because  of  the  bulk  of  made-up  boxes  the  market  is 
restricted  to  local  territory.  The  company  is  one  of 
the  largest  in  its  section;  at  full  production  about 
200  workmen  are  employed,  while  sales  average  about 
$400,000  a  year. 

The  sales  are  in  charge  of  the  president.  Two  sales- 
men are  employed.     These  men  give  little  or  no  time 


404        PROBLEMS  IN  SALES  MANAGEMENT 

to  aciiial  solicit iiifi;  on  their  own  initiative,  but  interview 
a  prosjK'ctive  customer  only  when  the  latter  has  called 
for  a  bid  on  a  certain  type  of  box.  Since  such  boxes 
are  made  for  a  specific  product,  and  are  covered  with 
the  customer's  wrai)j)(M',  the  Penn  Company  cannot 
manufacture  for  stock  in  dull  times,  for  there  is  no 
standard  product.  The  present  aiTangement  has  made 
it  dillicult  for  the  sales  department  to  furnish  a  uniform 
and  a  continuous  volume  of  orders  for  the  production 
department.  In  fact,  fluctuations  through  the  year 
have  been  very  marked ;  at  times  the  factory  has  been 
rushed  with  orders  that  it  could  not  fill;  at  other  times 
the  plant  has  had  to  run  on  part  time  for  lack  of  work. 

Question 
What  measures  should  the  sales  department  take 
to  insure  more  continuous  production? 


Problem  249 
Sales  Practices 

The  traveling  salesmen  of  St.  Louis  ha\'e  formed  an 
association,  the  object  of  which  is  stated  as  follows: 

(1)  To  stop  the  pernicious  custom  of  jobbing 
houses  offering  5%  rebate  on  specialty  orders; 

(2)  To  keep  a  close  check  on  manufacturers  selling 
chain  stores; 

(3)  To  insist  upon  specialty  salesmen  putting  a 
price  upon  all  sj^jccialty  orders ; 

(4)  To  force  specialty  salesmen  to  allow  orders  to 
fall  as  they  will,  without  suggestions  on  their  part 
as  to  the  jobber. 


SALES  METHODS  405 

Questions 

1.  Should  a  manufacturer  of  food  products  using 
specialty  salesmen  to  develop  retail  trade  encourage  the 
continuation  of  the  association  on  the  basis  of  its 
declared  purposes? 

2.  Should  a  wholesale  grocer  advise  his  salesmen  to 
become  members? 


Problem  250 

Unfair  Trade  Practices 

The  Sales  Managers'  Bureau  of  the  St.  Louis  Chamber 
of  Commerce,  in  a  letter  to  members  on  the  subject  of 
the  ''menace  of  collective  buying,"  states  that  the 
following  practices  result  in  destructive  and  demoralized 
trade  conditions: 

(1)  Cut  prices. 

(2)  Buying  power  stating  the  price. 

(3)  Syndicate  and  purchasing  company  buying. 

(4)  SpUt  shipments. 

(5)  Non-kindred  buying. 

(6)  Consignments  to  consumers. 

(7)  Guarantee  against  price  decline. 

It  is  recommended  that  manufacturers,  jobbers  and 
dealers  adhere  rigidly  to  legitimate  distribution  as  that 
term  is  known  and  understood  in  each  industry. 

Questio7i 
What  problems  confront  the  sales  manager  in  con- 
nection with  the  practices  enumerated? 


40(1         PH()BIJ:.MS  IX  SALKS  MANAGEiMENT 

Problem  251 
Unfair  Trade  Practices 

One  of  t\w  activities  of  the  Federal  Trade  C'ommis- 
sioii  is  the  enforcement  of  the  provisions  of  the  Clayton 
and  Sherman  Acts  with  respect  to  unfair  trade  practices. 
Many,  if  not  most,  of  these  practices  have  to  do  with 
sales  activities.  The  following  are  activities  concern- 
ing which  complaints  have  been  brought  before  the 
Federal  Trade  Commission. 

Against  an  oil  company: 

Stifling  and  suppressing  competition  in  the  manufac- 
ture and  sale  of  lubricants,  etc.,  by  price  discrimination 
and  by  fixing  its  sales  price  or  rebate  on  the  condition 
that  the  purchaser  shall  not  use  the  goods  of  com- 
petitors. 

Against  a  biscuit  compan}': 

Stifling  and  suppressing  competition  in  certain 
bakery  products  by  means  of  a  system  of  rebates  and 
discounts  calculated  to  cause  the  trade  to  purchase 
its  goods  either  largely  or  exclusively  and  by  making 
contracts  with  advertising  agencies  which  tend  to 
stifle  and  suppress  competition. 

Against  a  mailing-device  corporation: 

Stifling  and  suppressing  competition  of  its  sole  and 
only  competitor,  the  X  Company,  in  the  manufacture 
and  sale  of  its  product  in  interstate  commerce  by 
selling  its  products  at  and  for  a  price  which  is  less  than 
the  cost  of  selling  and  producing  the  same. 

Against  a  toy  manufacturer: 

Unfair  methods  of  competition  in  the  sale  of  X 
mechanical  toj^s  by  vague  and  indefinite  threats,  not 
made  in  good  faith,  to  institute  legal  proceedings  against 
their  competitor's  customers  for  alleged  unfair  and 
unlawful  competition  with  the  X  outfits  and  books  of 
instruction. 


SALES  METHODS  407 

Against  a  company  manufacturing  several  models  of 
vacuum-cleaning  machines : 
Stifling  and  suppressing  competition  in  the  manufac- 
ture, marketing,  selling  and  reselling  of  its  vacuum- 
cleaning  machines  by  fixing  the  standard  resale  prices 
and  refusing  to  sell  to  those  who  fail  to  maintain  such 
prices,  price  fixing  or  establishing  discounts  or  rebates 
on  condition  that  the  purchaser  shall  not  deal  in  the 
goods  of  competitors,  the  effect  of  which  is  to  sub- 
stantially lessen  competition  and  to  tend  to  create  a 
monopoly. 

Against  a  lumber  company: 

Engaging  in  a  combination  to  suppress  competition 
in  the  lumber  and  building-material  trade  with  the 
purpose  of  driving  mail-order  houses  out  of  the  retail 
lumber  business  and  forcing  consumers  to  purchase 
supplies  of  lumber  from  local  dealers  and  carried  out 
by  procuring  manufacturers  to  discontinue  furnishing 
information  to  competitors,  by  steaUng  trade  secrets, 
spying  upon  the  business  of  competitors,  submitting 
to  them  bogus  and  spurious  inquiries  for  estimates, 
quotations,  and  other  printed  matter  relating  to  the 
use  of  lumber. 

Against  the  Wholesale   Saddlery   Association   of   the 
United  States  and  the  National  Harness  Manufac- 
turing Association  of  the  United  States: 
Engaging  in  a  combination  and  conspiracy  to  dis- 
courage and  suppress   competition  in   the  wholesale 
harness  and  saddlery  trade  by  unfair  hampering  and 
of  certain  competitors  not  members  of  the  Wholesale 
Saddlery  Association,  by  inducing  manufacturers   of 
saddlery  accessories  to  refuse  to  recognize  such  com- 
petitors as  legitimate  jobbers  or  wholesalers  entitled 
to  jobbers'  or  wholesalers'  discounts  and  terms. 

Against  a  packing  company : 

Using  the  following  unfair  methods  of  competition: 
fixing  a  schedule  of  resale  prices  for  a  cleansing  prepara- 
tion and  enforcing  maintenance  thereof  by  means  of 


408        PlU)HLIvMS  IN  SALES  MANAGEMENT 

agroonionts  witli  joIjIxm-s  and  wholosalors  and  throats 
to  disrontinue  selling  its  products  to  jobbers  failing  to 
maintain  resale  jiriees  thereof;  by  selhng  at  lower 
prices  to  j()l)l)ers  and  \vhol(>salers  maintaining  resale 
prices;  l)y  procuring  jt)bbers  and  wholesalers  to  refrain 
from  selling  its  product  to  other  jobbers  and  whole- 
salers failing  to  maintain  the  resale  prices  thereof;  and 
by  diverting  the  sale  of  the  trade-marked  cleansing  prep- 
aration from  retailers  and  jobbers  failing  to  maintain 
the  resale  price. 

Against  a  Chicago  manufacturer: 

Attempting  to  lessen  competition  and  create  a 
monopoly  by  selling  and  contracting  to  sell  sheep- 
clipping  and  horse-shearing  machines  by  agreement  on 
the  part  of  purchasers  not  to  deal  in  similar  products 
maiuifactured  by  competitors  of  respondent. 

Against  a  paint  concern: 

Using  an  unfair  method  of  competition  in  the  sale  of 
varnish  and  kindred  products,  consisting  in  giving 
gratuities  of  different  kinds,  including  sums  of  money 
to  the  employees  of  customers  and  prospective  cus- 
tomers and  the  customers  and  prospective  customers 
of  competitors  as  an  inducement  to  influence  their 
employees  to  purchase  respondent's  product  and  to 
refrain  from  purchasing  those  of  respondent's  com- 
petitors. 

Against  the  manufacturer  of  a  brand  of  linoleum: 

Using  an  unfair  method  of  competition  in  the  sale 
of  floor  covering  by  representing  to  the  public  a  certain 
product  composed  of  felt  base,  impregnated  with 
asphaltum  and  painted  to  represent  linoleum. 

Against  a  coffee  concern: 

Using  an  unfair  method  of  competition  in  the  sale 
of  coffee  and  tea:  namely,  oiTering  as  inducement  to 
purchase  respondent's  products  certain  coupons  re- 
deemable in  prizes  and  premiums  distributed  according 
to  lot. 


SALES  METHODS  409 

Against  a  rubber  company: 

Stifling  and  suppressing  competition  in  the  sale  of 
automobile  tires  by  fixing  and  maintaining  resale  prices, 
requiring  dealers  to  maintain  such  prices,  and  refusing 
to  sell  to  those  who  will  not  maintain  such  resale 
prices,  falsely  that  it  furnishes  certain  unique  services 
which  are  such  as  are  ordinarily  furnished  by  retail 
dealers,  compelling  dealers  to  carry  excessive  stocks, 
refusing  to  allow  dealers  to  make  adjustments  on  un- 
satisfactory tires,  requiring  dealers  (w^ho  also  handle 
automobiles)  to  specify  X  tires  on  all  automobiles, 
motor  trucks,  and  motor  cycles  ordered  by  them, 
requiring  dealers  to  permit  respondent  to  make  inven- 
tories of  all  tires  handled  by  such  dealers,  compelling 
dealers  to  refrain  from  competitors'  tires  as  substitutes 
for  respondent's  when  such  dealers  are  unable  to  furnish 
sizes  of  respondent's  tires  requested,  selling  tire-apply- 
ing machines  to  dealers,  but  restricting  use  of  them  to 
correspondent's  tires,  selling  consumers  direct  at  the 
same  price  as  dealers  when  such  consumers  will  agree 
to  use  respondent's  tires  exclusively,  selling  its  products 
on  the  condition,  agreement,  or  understanding  that  the 
purchaser  shall  not  use  or  deal  in  the  goods  of  a  com- 
petitor. 

Questions 

1.  Assuming  that  the  facts  bear  out  complaints  in 
each  case,  what  should  be  the  attitude  of  the  sales  man- 
ager toward  each  practice  on  the  basis  of  business 
expediency? 

2.  Does  long-run  development  of  the  business 
require  any  change  in  this  attitude? 

3.  Which  of  the  above  practices  are  clearly  detri- 
mental to  both  the  public  and  to  business  in  general? 

4.  Which  practices  can  be  considered  of  doubtful 
value  from  the  view-point  of  the  sales  manager? 


PART  VI 

SALES  OPERATIONS— 
I  MANAGEMENT  OF  SALES  FORCE 


PART  VI 

SALES  OPERATIONS- 
MANAGEMENT  OF  SALES  FORCE 

OUTLINE 

A.  Training  of  Sales  Force. 

1.  Advantages    and    disadvantages    of    specialized 

training  of  salesmen. 

2.  Factory  training  versus  special-school  training. 

3.  Requirements  for  training  and  lengths  of  course 

for  specific  products. 

4.  Organization  of  courses  antl  financing  of  instruc- 

tion. 

B.  Compensation  of  Sales  Force. 

1.  Various  plans  of  compensation. 

2.  Applicability  of  salary  plans  to  different  types  of 

business. 

3.  Advantages    and    shortcomings     of     commission 

payment. 

4.  Salary-plus-commission  plans. 

5.  Bonus,  profit-sharing,  and  other  plans. 

C.  Management  and  Supervision  of  Sales  Force. 

1.  Ecjuipment. 

(a)   Portfolios,  samples,  models. 
(6)    Automobiles;   supervision. 
(c)    Other  equipment. 

2.  Supervision  and  Control. 

(a)  Reports    of    salesmen,    types    of    reports; 

methods  of  handling;  action  required. 

(b)  Reports  of  field  managers  and  of  district  and 

branch    managers:     nature    of    reports, 
treatment,  and  action  required. 

(c)  Expenses  accounts;    policy  and  methods  of 

supervision. 

413 


411         PROBLEMS  IN  SALES  MANAGEMENT 

'A.  Cooperation  of  sales  depart  iiieiit   with  sales  force. 
(a)    Methods  of  cooperation    with   salesmen   in 

field. 
ib)    Securing  cooperation  of  salesmen  in  advei- 

tisiiiK- 

(c)  Seciirin}:;  eoopeiation  of  salesmen  in  use  and 

disti'il)Ution  of  dealer  helps. 

(d)  Inti'a-depart mental  cor'resiKnidence. 
1.  Stimulation  of  sales  force. 

(a)  Reasons  for  special  methods  of  sales  stinui- 
lation. 

(/>)  Sales  contests:  ad\anta<i-es  and  disadvan- 
tages. 

(1)  Methods  of  organizing. 

(2)  Typical  sales  contests, 
(r)    Sales  conventions. 

(1)  Cost  and  benefits. 

(2)  Organization  of  sales  conventions. 

(3)  Typical  sales  conventions. 

(d)  Prizes,  bonuses,  and  other  methods  of  sales 
stimulation. 

GENERAL  QUESTIONS* 

A.     Training  of  Sales  Force. 

Should  a  concern  hire  experienced  or  inexperienced 
salesmen?  Is  training  necessary  for  experienced  sales- 
men, provided  (a)  they  have  sold  similar  lines;  (b)  they 
have  been  engaged  selling  different  lines,  but  reaching 
the  same  class  of  dealers?  What  are  the  advantages 
and  disadvantages  of  hiring  untrained  salesmen?  How 
should  salesmen  be  trained?  Under  what  conditions 
is  it  advisable  to  establish  a  special  school  for  training 
salesmen?  What  are  the  advantages  and  disadvantages 
of  the  types  of  training  used  by  representative  concerns? 
What  are  the  requirements  for  a  successful  training 
course?  In  what  matters  should  instruction  be  given? 
What  should  be  the  length  of  the  course?  How  should 
candidates  be  selected?  What  arrangements  should  be 
made  as  to  payment  of  candidates  during  the  period 
of  instruction?  How  should  courses  be  financed? 
Should  training  coui'ses  lie  open  to  old  salesmen  as  well 
as  to  new  recruits  to  the  sales  force?  Should  concerns 
with  national  sales  organizations  attempt  to  bring  sales- 
men to  the  manufacturing  plant  or  should  separate  sales 
schools  be  held  in  separate  sales  districts? 


MANAGEMENT  OF  SALES  FORCE  415 

B.  Compensation  of  Sales  Force. 

What  are  the  advantages  and  disadvantages  of  the 
various  methods  of  compensation  for  salesmen  now  in 
use,  such  as  salary,  salary  and  commission,  salary  and 
bonus,  pure  commission,  and  others?  To  what  extent 
is  the  selection  of  plan  for  payment  of  salarj^  dependent 

(a)  upon  the  customs  of  other  firms  in  the  same  line; 

(b)  upon  the  nature  of  the  business;  (c)  upon  the  finan- 
cial resources  of  individual  concerns;  (d)  upon  the 
character  of  the  salesmen?  Under  what  conditions  is 
the  salary  plan  of  compensation  practical?  When  should 
the  pure  commission  method  be  used?  To  what  extent 
are  bonus,  profit-sharing,  and  other  plans  successful 
as  a  means  of  securing  the  best  efforts  of  salesmen? 

C.  Management  and  Supervision  of  Sales  Force. 

When  should  salesmen  be  provided  with  automobiles? 
What  methods  should  be  used  to  supervise  the  use  of 
automobiles  by  sales  force? 

How  is  the  selling  equipment  of  salesmen  determined? 
What  experience  should  govern  the  selection  and  prep- 
aration of  samples,  models,  portfolios,  and  other  equip- 
ment, for  salesmen? 

What  reports  should  be  required  of  salesmen?  To 
whom  should  such  reports  be  sent?  How  should  they 
be  handled  at  headquarters?  What  reports  should  be 
made  by  field  managers,  by  district  managers,  and  by 
sales  managers? 

How  should  expense  accounts  be  supervised?  Should 
the  company  act  liberally  in  granting  expense  accounts 
or  limit  expense  items  carefully?  Should  the  method 
of  compensation  be  so  designed  that  expenses  are  borne 
by  the  salesmen  themselves? 

Why  must  methods  be  devised  for  cooperation  of  sales 
department  with  salesmen  in  the  field?  What  is  the 
value  of  the  usual  methods  of  contact,  such  as  sales 
letters,  house  organs?  How  should  the  cooperation  of 
salesmen  be  secured  in  connection  with  advertising 
carried  on  by  the  company?  In  what  way  can  salesmen 
be  induced  to  be  of  service  in  securing  the  distribution 
and  use  of  dealer  helps? 

Should  sales  contests  be  used?  What  are  the  require- 
ments for  successful  sales  contests?  How  should  sales 
contests  be  organized  so  as  to  secure  the  interest  of  all 


4 Hi        IM{()HLKMS  IN  SALES  MANAGEMENT 

iiKMiilxM's  of  I  lie  salos  i'orco?  In  conduct  iiij;-  contests  or 
rcwanlinji;  s|)cci:il  clTorts,  what  should  he  the  nature  of 
prizes  or   bonuses  olfeicd? 

What  sliould  l>e  the  attitude  of  the  company  toward 
salos  eonfeicnces?  Shouhl  sal(>snien  be  encouraj^'ed  to 
visit  the  main  o(li('(>  at  frecpient  intervals?  When  should 
peiHM'al  conventions  of  salesmen  be  held?  ('iider  what 
conditions  is  it  advisable  to  hold  district  or  smaller 
conforoncos,  in  lieu  of  national  sales  conventions?  How 
should  sales  conventions  be  planned?* 


Pkoulem  252 

Special  Training  Schools 

Every  department  of  a  business  organization  is  con- 
fronted with  problems  of  selection  of  personnel  and  their 
training  for  si)ecialized  duties  in  the  organization.  Tech- 
nical schools,  trade  schools,  apprenticeship  sj^stems  are 
of  assistance  particularly  to  the  manufacturing  executive. 
In  selling  departments,  while  l)usiness  training  has  in  the 
past  been  available  and  of  great  assistance  to  executives, 
in  practically  every  case  a  concern  must  provide  for  de- 
tailed training  in  the  policies  and  methods  of  the  particular 
concern.  This  may  be  secured  graduall}^  through  expe- 
rience and  observation  while  engaged  in  the  performance 
of  assigned  duties,  but  in  other  cases  the  emploj'oe  is 
expected  to  a])sorb  as  nuich  as  he  needs  without  specific 
guidance  or  training.     On  the  other  hand,  a  considerable 

*The  management  of  salesmen  is  discussed  in  A.  W.  Shaw  Company, 
Selling  Series,  Handling  Salesmen  at  Lower  Cost;  A.  W.  Shaw  Company, 
Organizing  for  Increased  Sales;  J.  (J.  Frederick,  Modern  Salesnianage- 
ment;  D.  Appleton  &  Companj',  Cluipters  XII,  XIII,  XI\',  XV',  and 
XVI;  A.  W.  Shaw  Companj-,  An  Approach  to  Business  Problems,  Chapter 
XII;  A.  W.  Shaw  Companj^  Library  of  Business  Practice,  Volume  44, 
pages  77-136;  the  following  DartnoU  Reports:  Profit-sharing  Plans 
for  General  and  Sales  Executives,  Salesmoi  and  Office  Workers;  Review 
of  Types  of  Bonus  Playis  in  Use;  A  Report  of  Investigations  Made  Among 
Leading  Concerns  in  Varied  Lines  of  Business  to  Secure  I nformation 
Regarding  Application  and  Use  of  Quota  Plans  of  Demonstrated  Value; 
A  Special  Report  Shou-ing  Comparative  Methods  of  Compensating  Sales- 
men, Salaries  and  Commissions  Paid,  Average  Earnings,  Percentage  of 
Salary  Increase.  The  Bureau  of  Business  Research  of  Harvard  Uni- 
versity has  published  Methods  of  Paying  Salesmen  and  Operating 
Expenses  in  the  Wholesale  Grocery  Business  in  191S.  Among  the  works 
on  salesmansliip  should  be  mentioned  Harold  Whitehead,  Principles 
of  Salesmanship,  RonnUl  Press  Company;  S.  R.  Hoover,  The  Science 
and  Art  of  Salesmanship,  Macmillan;  Norval  A.  Hawkins,  The  Selling 
Process,  Norval  A.  Hawkins,  Detroit;  A.  W.  Shaw  Company,  The  Knack 
of  Selling;  National  Salesmen's  Training  Association,  The  Art  and 
Science  of  Selling  (8  volumes). 


MANAGEMENT  OF  SALES  FORCE  417 

number  of  larger  enterprises  find  it  advisable  and  necessary 
to  provide  specifically  for  training,  in  order  that  they  may 
be  assured  of  a  supply  of  sufficiently  skilled  or  trained 
workers.  Special  training  schools  are,  therefore,  estab- 
lished, some  of  them  providing  for  training  men  only  in 
the  production  departments,  others  only  for  sales  depart- 
ments, while  a  numl)cr  undertake  to  provide  training  for 
both  producing  and  disti'ibuting  forces. 


The  Duncan  Company  manufactures  a  line  of 
machine  tools  and  gasoline  engines,  which  it  sells 
through  an  extensive  branch  office  organization  direct 
to  factories  and  users  of  mill  supplies.  In  addition  to 
the  lines  it  manufactures  in  its  own  plants,  it  handles  an 
extensive  line  of  other  types  of  machines  in  more  general 
use,  such  as  drill  presses  and  the  like,  together  with  a 
complete  line  of  mill  and  factory  supplies.  In  the  past, 
salesmen  of  the  company  were  drawn  largely  from  the 
factories  of  the  company,  but  these  have  been  supple- 
mented more  and  more  as  the  company  grew  by  sales- 
men who  have  had  experience- in  allied  trades  or  with 
competitors  and  by  men  taken  from  technical  and  trade 
schools.  No  formal  training  has  been  provided,  but 
new  recruits  to  the  sales  force  are  expected  to  spend  a 
short  time  in  the  plants  of  the  company,  there  to 
observe  how  the  products  are  made.  While  at  head- 
quarters they  also  are  given  talks  by  the  sales  manager 
and  other  department  executives,  each  upon  the  work 
of  his  own  department.  They  are  then  assigned  to  the 
various  branches,  where  they  spend  a  few^  days  traveling 
with  one  of  the  older  salesmen;  after  that,  they  are  sent 
out  independently  to  visit  customers  and  prospects. 
The  vice-president  in  charge  of  sales  is  not  at  all 
satisfied  with  the  results  obtained  by  his  sales  force. 
While  he  admits  that  more  care  must  be  taken  in 
selection,  he  feels  that  a  definite  course  of  training 
should  be  arranged.  In  a  report  to  the  president,  he 
advises  the  establishment  of  as  pecial  training  school, 
but  states  that  he  is  undecided  as  to  the  type  of  school 
necessary.     He  has  referred  the  president  to  a  report 


418        TKOHLEMS  IN  SALES  MANAGEMENT 

of  tlio  Fifth  Annual  Convention  of  Corporation  Schools, 
of  whicli  tiic  liiin  is  a  nicniber.  From  this  he  gives  the 
followinfi;  extract : 

Special  training  schools  are  of  three  general  types: 

Type  1 — Company  Business — Study  Courses 
The  distinp:uishinK  foaturo  of  this  plan— the  student- 
employee  sixMids  all  of  his  time  in  studying,  not  being 
expected  to  do  :\\\\  productive  work  during  the  i)eriod  of 
training.  It  is  designed  to  get  definite  results  and  get 
them  quickly. 

Purpose: 

(a)     To  teach  specific  duties  and 

(6)      To  give  a  broad  knowledge  of  the  business — 

that    is,    its    organization,    policies,    products    and 

methods. 

Results: 

(a)  Employees  expected  to  be  })rought  to  highest 
effectiveness  in  shortest  time; 

(6)  Employees'  fitness  for  some  branch  of  the  busi- 
ness discovered;  a  broader  knowledge  makes  for 
more  intelligent  cooperation,  fewer  mistakes  and 
more  interest  in  the  business. 

Characteristic  features: 

Student's  time  entirely  non-productive; 
Students  are  selected  by  the  company; 
Attendance  is  compulsory; 
Attendance  is  on  company  time; 
Students  receive  pay  while  taking  the  course; 
Length  of  course — comparative!}'  short,  usually  less 
than  six  months; 

Students  are  grouped  at  or  sent  to  the  most  con- 
venient place  for  instruction; 
Small  groups,  intensive  instruction. 

Studetits: 

Selected  by  Training  Department,  or 

Selected  by  Employment  Department  and  approved 

by  Training  De{)artment,  or 

Selected  by  company  officials; 

Selected  by  branch  managers. 

Educational  methods: 

Definite  plan  and  outline  for  entire  course; 
Classroom  work — recitations; 
Individual  conferences  with  instructor; 


U 


MANAGEMENT  OF  SALES  FORCE  419 

Written  or  oral  reports  on  work; 

Written  or  oral  examinations; 

Home  reading  and  study; 

Observation  trips; 

Talks  by  company  officials; 

Records  kept  of  success  in  educational  work; 

Records  kept  of  personal  characteristics; 

Records  kept  of  success  after  completion  of  course; 

Full-time  instructor; 

Specially  prepared  texts. 

Expense: 

For  teaching  specific  duties — charged  to  department 

using  employees; 

For  teaching  business  as  a  whole — charged  to  general 

administration; 

The  principal  factor  of  expense  in  the  order  given — 

student  salary;  supervision  salary;  service  charges 

and  equipment. 

Factors  controlling  success  of  this  plan: 
Selection  of  students; 
Definite  plans  and  intensive  instruction; 
Close  supervision; 
Constant  revision  of  study  material. 

Type  2 — Company  Business — Study  and  Practice 
Courses 

In  this  type  of  training  there  is  less  emphasis  on  the 
study  side  and  more  on  the  experience  in  working  depart- 
ments. The  proportion  varies  a  great  deal.  In  some,  the 
time  on  study  work  is  but  a  small  percentage  of  the  total 
time,  while  in  others  as  much  as  half  is  spent  on  the  study 
and  instruction  work.  The  student  is  expected  to  do  some 
productive  work,  which  is  chosen  on  account  of  its  educa- 
tional value.  In  general,  these  courses  are  longer  than 
those  of  the  first  type. 

Purpose: 

To  give  an  insight  into  a  business  as  a  whole. 

Results: 

Employees'  fitness  for  a  particular  part  of  the  busi- 
ness discovered; 

New  employees  lay  a  foundation  of  useful  knowledge 
upon  which  they  can  specialize. 
Gives  an  intimate  acquaintance  with  personnel  and 
plant. 


•12U        PROBLEMS  IN  SALES  MANAGEMENT 

Characteristic  features: 

Students'  time  partl>'  productive; 
Students  are  selcM'ted  by  the  conipan}'; 
Attendance!    on    related    instruction    work    is    com- 
pulsory; 

Instruction  work  usually  is  sivon  on  company  time; 
Students  receive  pay  while  taking  the  course; 
Lenf>;th  of  course  varies  from  several  months  to  four 
3'ears — the   majority   are  about  a  year; 
Instruction  work  is  done  in  }i;i"oups; 
\aried    woi'k    assi}z;mnents    undei-    actual    working 
conditions; 

Great  variet}'  of  experience  in  compaiatively  short 
time. 

Students: 

Selected  by  Training  DepartnuMit,  oi' 

Selected  by  lOmpIoyment  Department  and  a|)pioved 

by  Training  Depaitment ,  or 

Selected  by  company  officials. 

Educational  methods: 

Definite  plans  for  entire  course; 

Training  Dejiartment  shifts  men  to  give  a  variety  of 

experience ; 

Work  assiginnents  choscMi  on  account  of  their  value 

as  expei'ience; 

Order   of   taking   up   vai'ious   work    determined   by 

Training  Department ; 

Reports  on  work  done  in  various  departments; 

Outside   reading   required; 

Observation  trips  to  related  work; 

Talks  and  conference's  with  instructors  and  company 

officials; 

Record  k(>pt  of  succ(>ss  in  educational  work  and  after 

completion  of  course; 

Reports  received  from  (lei)artments  in  which  student 

is  working; 

Full-time  instruction  on  study  work; 

Supervisor,  of  experience  in  working  departments; 

Specially  prepared  texts  for  stud}*  work; 

Specially  prepared  work  schedule  with  notes  relating 

work  experience  with  study  material. 

Expense: 

Charged  to  general  administration; 
Prorated   to  departments  using  the  students  per- 
manently; 


MANAGEMENT  OF  SALES  FORCE  421 

Portion  of  salary  not  earned  in  departments  where 
students  are  assigned  for  experience  charged  to  the 
training  department. 

Factors  controlling  success  of  this  plan: 
Selection  of  students; 
Definite  plans; 
Closely  related  instruction; 

Cooperation  of  departments  in  which  students 
are  assigned  for  experience; 

Authorized  and  watched  by  high  company  officials; 
Careful  choice  of  order  in  which  the  work  is  assigned ; 
Not  expecting  departments  not  to  retain  men  to 
bear  cost  of  giving  them  experience. 

Type  3 — Company  Business — Work  Courses 

This  type  course  omits  practically  all  of  the  study  features 

of  Type  1  and  emphasizes  the  varied  work  feature  of  Type 

2.     In  general,  the  training  covers  a  longer  time.     The 

demands  of  the  productive  work  are  the  controlling  factor. 

Purposes: 

Opportunity  for  practical  experience; 
To  maintain  a  group  of  trained  men  from  which 
some  may  be  selected  for  more  responsible  work; 
To  train  employees  for  more  versatility  in  the  com- 
pany's business. 

Characteristic  features: 

Employees'  time  is  expected  to  be  entirely  pro- 
ductive; 

No  time  is  given  at  company's  expense  for  related 
instruction ; 

Students  are  selected  by  the  company; 
Students'  work  entirely  similar  to  that  of  other  em- 
ployees ; 

Students  are  assigned  to  several  departments; 
No  special  supervision  is  given,  except  by  regular 
department  executive ; 

Student  may  continue  more  or  less  indefinitely  in  a 
department  if  the  production  needs  demand  it. 

Students: 

New  employees; 

Selected  by  Employment  Department. 

Educational  methods: 

Variety  of  experience  by  assignments  to  typical 
departments; 


122      ph()tuj<:ms  tx  sales  mana(;i;mi;xt 

By  ohscM'vation  of  related  work; 
By  cjuestions  to  fellow-employees; 
Bj'  repetition  to  gain  skill. 

Expense: 

No  separate  aecount  kejit : 

Expense  ahsorlxni  hy  depart  iiiciit  in  which  tlie  men 

work. 

Factors  controlling  siirccs.s  of  this  jtlan: 
Selection  of  students; 

CoopcMation  of  departments  in  which  students  work; 
Arrangements  l)V  which  stutlent's  recpiests  for  trans- 
fers to  other  work  can  l)e  considered. 

The  following  are  specific  examjiles  of  the  tliree  types 
taken  from  the  same  report. 

Adduessograph  Company 
The  training  work  of  the  Addressograph  Company  is 
confined  to  the  training  of  salesmen.  There  are  three 
classes  of  this  service,  sales  correspondent,  advertising  men 
and  branch  manager.  The  course  of  training  consists  of 
lectures,  study  of  text-book  and  manual,  class  recitations 
and  examinations,  the  study  of  actual  machine  models  and 
demonstrations.  It  is  the  object  of  the  course  to  give  every 
new  man  a  clear  conception  of  the  manner  in  which  business 
in  general  is  transacted  and  a  thorough  knowledge  of  the 
history  of  the  Addressograph  and  its  application  and  use 
in  various  kinds  of  business. 

The  company 

2.  Nature  of  business:  IManufacture  and  sale  of  address- 
ing machines  and  equipment. 

3.  Graduates  of  company  training  course  assigned  to 
work  in:  large  city  territory,  or  provincial  or  dis- 
trict territory  with  headquarters  in  some  city,  or 
continuous  traveling  positions. 

4.  Average  number  of  college  men  employed  each  year: 
30,  not  exclusivel}'  college  men. 

5.  Nature  of  work  after  finishing  company  training: 
Salesmanship. 

Educational  plan 

6.  Type  of  training  course:  Type  1. 

7.  Training  courses  given  at:   Home  office  in  Chicago. 

8.  Total  length  of  training  course:  Six  weeks. 

9.  Salary  during  training:  No  salary,  but  expenses  may 
be  advanced  upon  request  up  to  $15  to  S20  per  week. 


i 


MANAGEMENT  OF  SALES  FORCE  423 

10.  Principal  features  of  training  course:  First  a  thor- 
ough master}^  of  the  Addressograph;  second,  a 
scientific  course  in  salesmanship;  and  third,  intro- 
duction into  actual  selling  under  the  guidance  of 
an  expert  salesman. 

A dmission  requ irements 

11.  Physical  examination  required:  No. 

12.  Personal  interview  required  with  company  repre- 
sentative: Yes. 

13.  Do  company  representatives  visit  colleges  for  inter- 
views: No. 

14.  Previous  education  preferred:  Business  adminis- 
tration from  recognized  colleges. 

Norton  Company 
The  company  operates  its  main  factory  at  Worcester, 
with  abrasive  plants  at  Niagara  Falls  and  at  Chippewa,  and 
mines  at  Bauxite,  Arkansas.  It  has  also  a  small  plant  at 
Wesseling,  Germany.  It  employs  college  men  in  all  of  its 
plants  except  the  one  at  Bauxite  and  also  in  sales  positions 
in  all  parts  of  the  country  and  in  various  parts  of  the  Euro- 
pean continent.  The  method  of  operating  the  Norton 
cylindrical  grinding  machine  is  so  different  that  men  must 
be  specially  trained  for  the  work.  The  Norton  Company 
education  proposes  to  include  all  activities  which  make 
a  man  more  capable  of  filling  his  place  in  the  world.  The 
scope,  therefore,  of  the  educational  department  is  not 
limited  to  definite  courses,  but  special  courses  are  con- 
stantly being  proposed  for  men  who  must  be  trained  for 
some  specific  position  in  a  very  short  time. 

The  Company 

2.  Nature  of  business:  Manufacturing  of  artificial 
abrasive  and  grinding  wheels  and  similar  products. 

3.  Graduates  of  company  training  course  assigned  to 
work  in:  Any  of  the  plants  of  the  company  except 
Bauxite. 

4.  Average  number  of  college  men  employed  each  year: 
25-30. 

5.  Nature  of  work  after  finishing  company  training: 
Salesmanship,  research  work,  engineering  and  pro- 
duction. 

Educational  Plan 

6.  Type  of  training  course:  Type  2. 

7.  Training  courses  given  at:  Worcester,  Mass. 

8.  Total  length  of  training  course:  20  months. 

9.  Salary  during  training:    Individual  agreements. 


4LM      pi;()Hli:ms  in  sales  management 

10.  Principal  foaturos  of  traininp;  course:  The  study 
part  of  the  course  is  Hniiteci  to  Saturday  morning 
and  consists  of  lectures  and  quizzes  on  the  shop  or 
office  work  done  durinj:;  the  week. 

Admission  Requirements 

11.  Physical  examination  refpiired?  Yes. 

12.  Personal  int(>rview  recpiired  with  company  repre- 
sentative? Yes. 

13.  Do  comjiany  representatives  A'isit  colle{2;es  for  inter- 
views?  Yes,  in  the  East. 

14.  Previous  education  preferred:  Graduation  from  any 
technical  course,  but  preference  is  given  to  those 
who  have  had  considerable  mechanical  and  elec- 
trical experience  as  well  as  shop  work. 

Graton  .\nd  Knight  Manufacturing  Company 
The  Graton  and  Knight  Company  are  oak  leather  tan- 
ners and  makers  of  leather  belts  and  specialties.  New 
employcH's  usually  start  in  some  clerical  position.  If  a  man 
shows  a  special  aptitude  for  lousiness  and  gives  promise  of 
ability,  particularly  selling  ability,  he  is  given  a  special 
training  course  in  the  shops  covering  from  two  to  three 
months.  During  this  course  the  men  actually  handle  the 
leather  and  learn  to  perform  all  the  operations  in  the  various 
processes  of  leather  manufacture.  This  course  continues 
until  they  have  sufficient  practical  knowledge  to  enable 
them  to  discuss  the  business  and  its  processes  intelligently 
and  to  repiresent  the  firm  efficiently  in  outside  positions. 

The  Company 

2.  Nature  of  l)usiness:  Tanning  and  manufacturing  of 
leather  belting,  special  leather  goods  and  shoe  man- 
ufacturing supplies. 

3.  Graduates  of  companj'  training  course  assigned  to 
work  in :  Usually  at  Worcester,  Mass. 

4.  Average  number  of  college  men  employed  each  year: 
Two  or  three. 

5.  Nature  of  work  after  finishing  company  training: 
Usually  some  form  of  sales  work. 

Educational  Plan 

6.  Type  of  training  course:  Type  3. 

7.  Training  courses  given  at:  Worcester. 

8.  Total  length  of  training  course:  Two  or  three  months. 

9.  Salary  during  training:  Regular  salary. 

10.  Principal  features  of  training  course:  The  selection 
of  those  men  who  show  special  ability  and  the  inten- 
sive training  of  these  select  men  for  sales  service. 


MANAGEMENT  OF  SALES  FORCE  425 

Admission  Requirements 

11.  Physical  examination  required?  Not  usually. 

12.  Personal  interview  required  with  company  repre- 
sentative? Yes. 

13.  Do  company  representatives  visit  colleges  for  inter- 
views? No. 

14.  Previous  education  preferred:  Mechanical  engineer- 
ing, business  administration  and  law  are  valuable 
but  not  essential.  General  college  training  for  the 
development  of  the  candidate's  mind  is  considered 
most  important. 

The  Westinghouse  Electric  and  Manufacturing 
Company 

The  Westinghouse  Electric  and  Manufacturing  Company 
is  engaged  in  the  production  of  electric  appliances, 
machinery  and  apparatus.  Sales  departments  are  main- 
tained in  four  of  the  larger  cities  throughout  the  country. 
College  men  are  taken  into  the  company  for  special  training 
and  are  assigned  to  the  various  departments,  where  their 
work  is  closely  supervised,  both  in  shop  and  in  class,  to 
determine  their  ability  and  their  adaptability  to  special 
kinds  of  work. 

The  Company 

2.  Nature  of  business:  Manufacturing  of  electrical  ma- 
chinery. 

3.  Graduates  of  company  training  course  assigned  to 
work  in:  East  Pittsburgh  or  at  one  of  the  sales 
agencies. 

4;  Average  number  of  college  men  employed  each  year: 
156. 

5.  Nature  of  work  after  finishing  company  training: 
Sales,  engineering  design,  and  research,  manufactur- 
ing, construction  and  operating  companies. 

Educational  Plan 

6.  Type  of  training  course:    Types  1  and  2. 

7.  Training  courses  given  at:  East  Pittsburgh,  Pennsyl- 
vania. 

8.  Total  length  of  training  course :    One  year. 

9.  Salary  during  training:  Initial:  first  six  months, 
$50  per  month;  second  six  months,  $60  per  month. 

10.  Principal  features  of  training  course:  Classwork  is 
largely  catechisms,  examinations  and  problems.  Not 
lectures. 


42()        PKoliLllMS  IN  SALKS  MANAGEMENT 

Admission   livqnircmriits 

11.  Physical  cxaiuinatioii  if(|uirc(l'      ^'os. 

12.  Personal    iiitprviow    r('(iuii((l    with    coinpany    repre- 
sentative?    Yes. 

13.  Do  company  represent alives  visit  colleges  for  inter- 
views?    Yes. 

14.  Previous  education  iJiclVired:     Mechanical  or  tech- 
nical engineering  graduation. 

Questions 

1.  \\  hich  j)hin,  if  any,  should  be  adopted? 

2.  Is  it  advisable  to  attempt  to  train  men  for  the 
sales  department  and  other  departments  in  the  same 
school? 


Problem  253 
Training  Salesmen 

The  following  outline  of  a  course  for  the  training  of 
salesmen  was  submitted  by  the  committee  on  adver- 
tising and  selling  at  the  fourth  annual  convention  of  the 
National  Association  of  Corporation  Schools : 

I.     Purpose: 

To  furnish  the  basis  of  a  course  of  instruction  on  the 
art  of  salesmanship  for  members,  whether  manufac- 
turers, wholesalers  or  retailers. 
For  1.     Travelers. 

(1)  Specialty. 

(2)  Staple. 

For  2.  Counter  or  floor  men. 

For  3.  Selling  agents  of  various  kinds. 


MANAGEMENT  OF  SALES  FORCE  427 

II.  Organizing  a  School  of  Instruction: 

1.  Text-books  and  collateral  reading. 

2.  Instructors. 

(1)  Actual  experience. 

(2)  A  trained  mind. 

(3)  The  teacher's  attitude. 

3.  Methods  of  instruction. 

III.  Salesmanship:      Its    Place    in    the    Field    of 
Business: 

1.  Relation  to  other  phases  of  })usiness. 

2.  Salesman's  dignified  work. 

3.  Opportunities  in  salesmanship. 

4.  Importance  of  selling  knowledge  to  every  man 
in  business. 

5.  Selling  as  a  stepping-stone  to  sales  management 
and  other  executive  positions. 

6.  What  the  salesman  has  an  opportunity  to  learn. 

7.  The    "Salesmen    are    born,    not    made"   fallacy 
refuted. 

IV.  Bird's-eye  View  of  the  Whole  Field  or  Mar- 
keting: 

1.  Three  phases  of  selling. 

2.  Trade  factors,  trade  channels  and  trade  relations. 

(1)  Manufacturers'    seUing    and   advertising 
problems. 

(2)  Wholesalers'  problems. 

(3)  Retailers'  problems. 

(4)  The  chain  store. 

3.  The    product,    the    market,    and    reaching   the 
market. 

4.  Merchandising  (buying). 
4a.  Price  maintenance. 

5.  Relation  of  personal  selling  to  this  field. 

V.  Divisions  of  Selling: 

Retail  selling  behind  the  counter. 

Wholesale  staple  or  specialty  selling. 

Where  buyer  seeks  seller  and  vice  versa. 

Single  versus  repeated  sales. 

Staple  selling. 

Specialties  selling. 

Specialties  sometimes  gradually  become  staples. 

The  branded  staple  and  its  selling  problems. 

VI.  Definition  of  a  Sale. 

VII.  Factors  in  a  Sale. 


428        ri{()Hl.i:MS  IN  SALi;s  MANACiKMKNT 

\'III.     TiiK  Sklling  Prockss: 
Developments  in  a  sale: 

1.  Attention. 

2.  Int(M-ost. 

3.  Desire. 

4.  ConfideiuT. 

5.  Close. 

IX.  The  Selling  Process  (continued): 
Preliminary  to  the  interview: 

1.  Studyinfj;  the  prospect. 

2.  Gathering  the  information. 

3.  Gettinfi;  in  to  see  the  buyer. 

4.  The  actual  approach. 

X.  The  Selling  Process  (Continued): 
The  interview: 

1.  Attention — its  nature,   metliods  of   secur- 
ing it,  the  opening  talk. 

2.  Attention  to  a  varied  line. 

3.  Trunk  lines  and  sample  rooms. 

4.  Attention  in  retail  selling. 

5.  Arranging  the  sample  display. 

XI.  The  Selling  Process  (continued): 
Interest : 

1.  The  demonstration. 

2.  Handling  interruptions. 

XII.  The  Selling  Process  (continued): 
The  interview: 

1.     Handling  objections. 

(1)  Antagonism  vs.  a  friendly  get- 
together. 

(2)  Unreasoned  inhibitions. 

(3)  Discussing  price. 

(4)  Discussing  competitors'  goods. 

(5)  Minimizing  objections. 

(6)  Anticipating  objections. 

XIII.  The  Selling  Process  (continued): 
The  interview: 

1.  Desire. 

Indications. 

XIV.  The  Selling  Process  (continued): 

The  interview: 

1.  Confidence. 

A  separate  development. 


I 


MANAGEMENT  OF  SALES  FORCE  429 

XV.     The  Selling  Process  (continued): 

The  interview: 

1.  The  close. 

(1)  The  crux  of  all  salesmanship. 

(2)  Expecting  him  to  buy. 

(3)  Make  decisions  and  don't  ex- 
pect them. 

(4)  Closing  is  not  coercing,  over- 
selling, nor  selling  a  man  some- 
thing he  doesn't  want;  it  is 
overcoming  the  habit  of  inde- 
cision. 

(5)  Courage. 

(6)  Positive  suggestion. 

(7)  "Decision  on  a  minor  point" 
principle. 

(8)  "Writing  out  the  order"  close. 

(9)  Closing  the  retail  sale. 
(10)  Mechanics  of  closing. 

XVI.  The  Selling  Process  (continued) : 

1.  Persistence  of  the  right  kind. 

2.  Avoidance  of  ill  humor. 

3.  Reserve  talk  and  how  to  use  it. 

4.  The  "bill  starter." 

5.  Getting  the  price. 

6.  Emphasizing  service  and  quality. 

7.  "Think  it  over." 

8.  Calling  back. 

XVII.  After  the  Sale: 

1.  Furnishing  buyer  helpful  details. 

2.  Right  impression  at  leaving. 

3.  Securing  cooperation  and  indorsement. 

XVIII.  Human  Appeals  that  Sell: 

1.  Scientific  method  used,  but  selling  not  a  coldly 
scientific  process — a  friendlj^,  red-blooded,  man- 
to-man  process,  where  personality  and  sincerity 
count. 

2.  Motives  that  may  be  appealed  to. 

3.  Two  avenues  of  appeal. 

(1)  Logic — to  reason — intellect. 

(2)  Word     pictures — to     imagination — emo- 
tions. 


430       PUOBLlvMS  IN  .SALES  MANAGEMENT 

XIX.  EssKNTiAL  Qualifications  of  the  Salesman^ 
THE  Devkloi'mknt  OF  Pkijsoxality,  Character  and 
(\\Lirn;R: 

1.  Tli()U^;lit,  study  and  woik;  native  ability;  licalth, 
prcparodnoss;  ambition  and  application;  obser- 
vation; t;u't ;  concentration;  courage;  honesty; 
confidence;  enthusiasm;  loyalty;  optimism;  imag- 
ination; education;  voice  and  appearance;  per- 
sonality; self-analysis  and  improvement. 

XX.  Salesman's  Duties  and  Responsibilities: 

1.  Orf^anizinji;  a  territory. 

2.  Planning  the  personal  selling  campaign. 

3.  Securing  and  giving  cooperation  to  customers 
and  house. 

4.  Planning  the  day's  work. 

5.  Salesman's  time  and  its  u.se. 

XXI.  Planninc;  the  Presentation: 

1.  Picking  the  selling  points. 

2.  Planning  the  sel'ing  talk. 

3.  Planning  the  demonstration. 

4.  Planning  the  selling  efiui])ment. 

XXII.  Retail  Selling: 

1.  Why  the  manufacturer  is  interested. 

2.  The  Wooltex  course — same  principles  apply, 
only  methods  differ. 

3.  Instruction  in  the  store  methods,  store  system 
and  store  policy. 

4.  Vocabulary  and  address. 

5.  Knowledge  of  line 

6.  Showing  the  line. 

7.  Focusing  attention  on  one  article. 

8.  Closing  the  sale  on  that  article. 

XXIII.  Attracting  the  Buyer's  Attention  to 
Goods  Other  than  Those  for  Which  She  Came: 

1.  Handling  the  "looker"  so  as  to  turn  her  into  a 
buyer. 

2.  Building  a  clientele. 

XXIV.  Selling  in  Different  Lines  (as  examples) : 

1.  Selling  machinery. 

2.  Selling  advertising  agency  service. 

3.  Selling  office  filing  equipment. 

.4//  specialties 


M 


MANAGEMENT  OF  SALES  FORCE  431 

Question 
What  assistance  does  this  give  to  the  sales  man- 
ager of  the  Henderson  Automobile  Accessories  Com- 
pany, planning  to  sell  direct  to  retailers  through  a 
much  augmented  sales  force?  The  company  realizes 
the  need  of  training  the  new  force  quickly. 


Problem  254 
Training  of  Salesmen 

(a)  A  manufacturer,  or  jobber,  well  known  for  the 
quality  of  his  goods,  seeks  to  place  upon  the  market  an 
article  of  merchandise  which  he  has  not  previously 
manufactured  (or  handled,  if  a  jobber)  and,  because  of 
the  high  quality  of  the  article,  is  obliged  to  ask  a  higher 
price  than  his  competitors  are  asking. 

Question 
How  should  his  salesmen  be  trained  to  present  this 
new  article  of  merchandise  to  the  trade? 


(6)  A  manufacturer,  or  jobber,  newly  organized 
and,  therefore,  unknown,  except  through  the  personnel 
of  his  executives  and  employees,  or  the  manufacturer, 
or  jobber,  is  entering  new  territory  in  which  he  is 
practically  unknown. 


Question 
How  should  his  salesmen  be  trained? 


432        I'UUBLKMS  IX  SALES  MANAGEMENT 

(c)  A  iiKUiufnc'turor,  or  i()l)l)or,  who  has  not  been 
('(•lc'))nit(Ml  for  (he  hi}2;h  tiuuHty  of  goods  which  he 
niamifacliircs,  or  liandles,  announces  a  qiiahty  Hne. 

Question 

How  sliould  his  salcsiiicn  he  trained? 


Problem  255 

Divisional  vs.  Centralized  Training  Course 

FOR  Salesmen 

In  sales  organizations  where  it  has  been  found 
necessary  to  decentrahze  management  to  a  consider- 
able extent,  the  problem  arises  as  to  whether  salesmen 
should  be  trained  in  the  divisional  offices  or  districts 
or  in  the  plant  or  sales  headcjuarters.  The  Sherwin- 
AMlliams  Company,  which  has  over  500  sales  repre- 
sentati\'es,  divides  the  United  States  into  nine  sales 
districts  each  in  charge  of  a  district  sales  manager. 
Under  each  district  manager  there  are  four  or  five 
divisional  managers  in  direct  charge  of  salesmen. 
In  a  typical  district  the  district  sales  manager  is  in 
charge  of  80  salesmen  and  is  given  full  responsi- 
bility in  selection  and  training  of  his  own  men.  He 
personally  plans  and  supervises  the  educational  work 
for  their  training,  decides  what  sort  of  training  is 
necessary,  whether  much  or  little,  theoretical  or  prac- 
tical, whether  administered  by  himself  or  by  others. 

The  Ronald  Company,  manufacturing  calculating 
machines,  has  adopted  the  other  method.  Recruits  are 
taken  to  the  central  office  at  the  factory,  the  sales 
school  is  conducted  at  intervals  for  the  purpose  of 
training  these  men  who  are  selected  and  sent  in  by 
the  sales  agents  in  the  various  territories  and  returned 
to  them  after  two  weeks'  schooling. 


MANAGEMENT  OF  SALES  FORCE  433 

Questions 

1.  What  are  the  advantages  of  each  plan?  The  dis- 
advantages? 

2.  To  what  extent  should  the  sales  manager  be  influ- 
enced in  deciding  between  district  and  central  training 
by  the  following  factors: 

(a)  Size  of  sales  districts. 
(6)  Size  of  the  concern. 

(c)  Location  of  sales  headcjuarters  and  factory. 

(d)  Type  of  product. 

3.  Should  salesmen  who  have  been  in  the  field,  as 
well  as  new  men,  be  admitted  to  the  training  courses? 


Problem  256 
Training  of  Salesmen 

Sixty-five  per  cent  of  the  salesmen  employed  by 
a  middle-western  firm  failed  to  make  good.  The 
general  sales  manager  was  at  a  loss  to  understand  the 
reason  for  this  high  mortality  rate. 

The  company  employed  only  high-grade  men, 
trained  them  carefully,  and  sent  them  forth  with  best 
wishes  and  high  hopes.  The  men  failed  to  stick, 
however.  In  a  week,  two  weeks,  or  a  month,  they 
would  fall  by  the  wayside,  and  a  new  crew  would  have 
to  be  recruited,  trained,  and  sent  out  to  meet  the  same 
fate.  Only  about  one  man  in  three  stuck  to  the  job 
and  became  a  really  successful  salesman  for  the  line. 

In  the  training  of  the  men  for  selling  a  high-priced 
fixture  for  retail  stores,  men  spent  several  days  at  the 
salesroom  maintained   by   the  manufacturer.     There 


434        FKOJiLKMS  IN  SALES  MANAGEMENT 

tli(\v  lojirnod  many  of  the  udvantasos  of  the  product 
and  were  sliown  tlie  record  of  master-salesmen,  who 
had  made  fortunes  from  the  sale  of  this  one  product. 

Question 
What  reasons  misht  be  assigned  for  the  dispropor- 
tionate number  of  failures? 


Problem  257 
Training  Salesmen 

The  following  is  an  outline  of  the  new  educational 
program  of  the  Burroughs  Adding  Machine  Company, 
as  taken  from  the  Burroughs  Bulletin  late  in  1920: 

The  new  program  of  sales  instruction  is  a  positive, 
definite,  standardized  course  which  affects  all  members  of 
the  Burroughs  selling  organization.  It  is  being  adopted  as 
a  permanent  plan.  It  is  expected  to  require  approximately 
one  3'ear  to  complete.  It  is  a  "study-as-you-work"  pro- 
gram and  is  not  intended  to  work  a  hardship  or  place 
any  unreasonable  burden  on  salesmen  who  are  working 
hard  in  the  field  every  da3\ 

The  Material 

Built  in  small  units — very  readable — all  non-essentials 
eliminated. 

Consists  of  three  major  courses. 

For  Prospective  Salesmen — Men  who  have  not  yet 
been  (Muployed,  but  who  look  promising.  ]\Ien  who  have 
indicated  a  desire  to  join  the  Burroughs  selling  organization 
and  who  would  like  to  determine  their  fitness  and  prove 
their  aptitude  for  our  business.  This  study  material  is 
intended  for  the  training  of  men  l)efore  thoy  join  the 
organization. 

For  Junior  Salesmen — New  men  who  have  just  come 
into  the  selling  organization  or  who  have  been  juniors  for  a 
short  time. 


MANAGEMENT  OF  SALES  FORCE  435 

For  Senior  Salesmen — Advanced  material  which  the 
senior  will  take  up  after  he  has  qualified  on  the  elementary 
or  junior  material  and  established  his  fitness  to  take  up  the 
advanced  sul)jects. 

How  Used 

The  material  for  prospective  salesmen  will  be  furnished 
them  that  they  may  study  while  in  their  present  positions 
and  thus  save  a  good  deal  of  their  elementary  training  time. 

Junior  salesmen  are  expected  to  remain  in  the  agency 
approximately  three  weeks  or  until  they  have  thoroughly 
mastered  the  elementary  junior  course.  They  will  be 
expected  to  have  machine  practice  on  both  A  and  C 
machines,  to  memorize  standard  demonstrations,  and  to 
become  thoroughl}^  familiar  with  the  fundamentals  of  this 
business. 

This  is  a  definite  course,  90%  self-instructing,  but  of 
course  requiring  some  supervision  of  the  agency  manager 
or  senior.  All  the  text,  practice  forms,  self-quizzes,  and 
material  needed  will  be  furnished.  Detailed  instructions 
to  the  agency  manager  will  also  be  furnished. 

For  the  Advanced  Junior  and  Senior  Salesmen — 
After  the  junior  has  passed  the  elementary  stage,  both 
he  and  the  senior  will  be  expected  to  put  in  an  average  of 
two  hours  a  day  or  ten  to  twelve  hours  a  week  studying.  The 
instruction  text  will  be  furnished  in  small  units  and  will  be 
self-instructing.  It  will  not  keep  the  salesman  out  of  the 
field  or  in  any  way  interfere  with  his  regular  selling  time. 

When  It  Starts 
It  becomes  effective  January  1,  1921. 

Whom  It  Affects 
Every  member  of  the  field  selling  organization — includ- 
ing juniors,  senioi's,  specialists,  and  agency  managers. 

What  Exceptions  or  Exemptions 
There   are    none.      Every   member   of   the  field  selling 
force  will  be  required  to  take  the  course. 

The  Cost 
The  Company  will  contribute  the  time  and  expense  of 
district  instructions.  That  part  of  the  educational  material 
which  constitutes  a  permanent  selling  library  will  be  fur- 
nished at  the  expense  of  the  agency.  All  of  the  instruction 
material  will  be  loaned  to  salesmen.  The  agency  manager 
and  salesmen  will  pay  their  personal  expenses  while  attend- 
ing schools. 


436        PI{()H1.1:MS  in  sales  iMANAGEMENT 

Tlif  Time  R((/uirefl  to  Study 
All  avcraj^c  ol"  an  liour  and  a  half  or  two  hours  a  day  or 
of  al)0ut  ten  to  twelve  hours  a  week,  divided  as  may  be 
most  convenient.     Tlie  plan  is  to  "learn-as-you-work." 

Time  l\((iinr<(l  to  Complete  Entire  Course 
An  averafj;e  of  ten  to  twelve  hours  a  week  spent  in  study 
should  enable  a  salesman  (o  coniplctc  tlic  entire  course  in  a 
year  or  l(\ss. 

/loir  Mdhrinl   Will  Be  Distributed 
It  will  he  sent  to  you  automatically  by  mail.     As  soon 
as  one  unit  is  completed,  another  will  l)e  mailed  to  you 
without  i('(]uest  or  correspondence  on  your  part. 

Who  Will  Do  the  Questioning  and  (irading 
As  soon  as  the  salesman  gets  started  on  his  study  he 
will  be  assigned  a  sixty-day  quota  of  study  by  the  district 
instructor.  Thereafter  he  will  be  examined  about  every 
sixty  days  by  the  district  instructor,  who  will  question  and 
personally  grade  every  man.  There  will  be  no  charge  for 
his  services.  Every  man  will  know  just  what  is  expected 
of  him  for  the  next  sixty  days. 

If  you  should  not  (jualify  or  pass  the  recjuired  per- 
centage in  your  examination,  you  will  be  assisted  by  the 
instructor  to  master  it  thoroughly  and  you  will  be  given 
atlditional  time  to  study  it.  A  penalty  will  be  imposed  for 
failure  to  make  a  passing  grade  and  you  will  be  examined 
again  on  the  instructor's  next  call. 

The  Advantage  of  Good  Grades 
To    the    salesman    conu^s    the    greatest    advantage   of 
knowing  his  subjects  thoroughly.     (Jood   gi'ades  will   be 
taken  into  consideration  wh(>n  territories  are  being  allotted 
and  promotions  made. 

Publicity  of  Grades 
Due  publicitv  will  be  given  to  grades  in  the  Burroughs 
Bulletin. 

The  Starting  Point  for  Juniors 
All  junior  salesmen  will  be  required  to  start  at  the  very 
beginning  and  qualify  on  every  part  of  the  junior  course. 

The  Starting  Point  for  Seniors 
Every  senior  will  be  required  to  answer  the  question- 
naires on  the  Training  Course  and  "Selling  the  Burroughs" 
and  prove  that  he  knows  thoroughly  the  text  contained  in 
the  junior  course.     If  he  is  already  familiar  with  it,  it  will 


I 


MANAGEMENT  OF  SALES  FORCE  437 

require  no  study  on  his  part,  but  he  will  be  expected  to 
establish  his  eligibility  to  take  the  advanced  material. 

The  Starting  Point  for  Agency  Managers 
They  will  start  at  the  same  point  that  the  senior  does. 

Study  Instructions 
Study  instructions  will  be  furnished  with  each  unit  of 
text — everything  will  be  carefully  explained. 

Style  of  I nstruction  Text 
Will   be    in    small    units — standard    ring    binder    size — 
punched — simplified  to   the  last  degree — to   contain  real 
"selling"  material — illustrated  wherever  practicable. 

Reference  Library 
When  the  course  has  been  finished,  the  salesman  will 
have  at  his  disposal  a  very  complete  Burroughs  selling 
reference  library  containing  a  textbook  on  practically  all 
major  subjects  relating  to  the  application  of  Burroughs 
machines.  He  will  possess  a  business  training  and  educa- 
tion that  he  could  not  secure  in  a  similar  short  training 
period  in  any  business  college,  school  or  university.  He 
will  possess  real  selling  information  which  will  increase  his 
earnings  several  fold. 

Uniformity  of  Grades 
The  district  instructors  will  do  all  the  examining  and 
marking  of  the  grades  on  each  questionnaire.  In  order, 
however,  to  secure  uniformity  in  grades,  irrespective  of 
what  district  a  salesman  may  be  in  or  by  whom  examined, 
papers  will  be  sent  to  the  Home  Office  where  supervision  of 
the  grades  will  be  made.  This  plan  will  insure  uniformity 
in  all  grades. 

Advance  Notice  of  Examinations 
The  district  instructors  will  give  agencies  ample  notice 
of  their  visits  to  permit  them  to  get  their  salesmen  together 
by  the  time  he  arrives. 

Forms  and  Blanks  to  he  Supplied 
Whenever  forms  are  to  be  filled  in  on  blanks  used  in 
connection  with  the  work,  they  are  furnished.     No  equip- 
ment will  be  needed  other  than  that  supplied. 

Relative  Progress  of  Salesmen 
Salesmen    who   are    ambitious,    who    study    and    apply 
themselves,   and  who  complete  their  tests  ahead  of  the 
regular  schedule,  will  be  supplied  with  additional  material 
as  soon  as  they  are  ready  for  it. 


43S         rnol'.LI'.MS   IX  SALKS  MANACiKMENT 

Severity  of  Tefits 

Exaiiiiiiat  ions  ;iic  to  find  out  whether  sah'sinen  are 
studyin^i  .-umI  ;i|)|»l\inii  the  text  to  theii'  work.  Thoy  will 
bo  fair,  coinpreheiisivc  (|iiestioiis.  There  will  he  no  "catch" 
(jucstions,  nor  will  there  he  any  (jiiestions  with  more  than 
one  coirect  answer.  Many  of  the  (iuesti(jns  are  jiresented 
in  the  form  of  the  actual  condition  which  the  salesman  will 
meet  in  the  field,  and  are  intended  to  ai)i)ly  the  text  to  the 
actual  i)rol)leins  which  the  salesman  will  meet  in  ev'eryday 
sollin<;'. 

Object  of  the  Stndji  Course 

To  make  eflicient  Burroughs  men.  To  make  them 
better  salesmen;  to  l(>ssen  sales  resistance;  to  (jualify  them 
to  sell  machines  better  fitted  to  their  customers'  require- 
ments; and  through  more  sales,  to  increase  their  earning 
power. 

It  is  not  inteiidecj  to  make  efficiency  engineers,  certified 
public  accountants  or  systems  experts  out  of  our  men. 
The  material  supplied  is  all  practical  selling  text.  Non- 
essentials and  irrelevant  reading  have  been  eliminated. 

SiinDtKiri/  of  Educational  Proc/ram 
Consists  of — 

Study  courses  for  prospective,  junior  and  senior 
Burroughs  salesmen. 

Is  a  positive  course  of  study,  definitely  planned,  with 
detailed  study  instructions  with  each  unit. 

There  are  no  exceptions  and  no  exemptions;  every 
member  of  the  selling  organization  is  required  to  take  it. 

"Study-as-you-work"  plan.  Requires  about  two  hours 
a  day  or  twelve  hours  a  week.  Entire  course  requires 
about  one  year  to  complete. 

Text  built  in  small  units,  loaned  to  salesmen  without 
charge.  Company  stands  expense  of  instructors'  time  and 
holding  of  schools. 

Each  salesman  given  sixty-day  study  quota  at  end  of 
which  period  he  is  personally  examined  and  graded  by 
district  instructor. 

Failure  to  pass  reciuircMl  jxMcentage  on  examination 
requires  additional  study.  Peisistent  failure  to  qualify 
denotes  salesman's  unfitness  for  business. 

Uniformity  of  all  examination  gradings  provided  for 
by  Hom(>  Office  supervision. 

Gootl  grades  basis  of  i)romotion  and  advancement. 

Publicity  of  grades  through  Burroughs  Bulletin. 


MANAGEMENT  OF  SALES  FORCE  439 

Seniors  and  agency  managers  not  permitted  to  study 
advanced  material  until  they  prove  fitness  by  passing  junior 
examinations. 

Completed  course  will  comprise  reference  library  of 
textbooks  covering  all  major  applications  of  Burroughs 
machines. 

THE  PROGRAM 

For  Prospective  Salesmen 
This  is  material  intended  for  the  man  who  contemplates 
joining  our  selling  organization  and  who  is  willing  to  put 
in  time  studying  to  fit  himself  as  well  as  possible  beforehand. 

A  Selected  Unit  from  "Selling  the  Burroughs" 
This    covers     Company     history,    policies,    standards, 
ethics,  future,  etc.,  and  gives  the  new  man  an  idea  of  the 
kind  of  Company  he  is  to  be  associated  with. 

Inspirational  Selling  Material 
This  will  consist  of  inspirational  booklets  and  folders 
which  are  intended  to  enthuse  the  prospective  salesman 
over  a  selling  position  and  make  him  anxious  to  take  up 
the  work  and  get  started. 

Machine  Practice  on  314 
(Using  Business  Practice  Hand  Book) 
He  is  here  expected  to  learn  the  standard  314  demon- 
stration and  learn  to  use  the  standard  demonstrating  sheets 
and  to  be  familiar  with  the  work  outlined  in  the  Business 
Practice  Hand  Book.  It  is  suggested  that  the  agency 
manager  loan  him  a  314  or  similar  standard  model  for  him 
to  practice  on  nights  and  odd  times  until  he  becomes 
sufficiently  familiar  with  it  to  be  able  to  give  him  the 
standard  314  demonstration  veroaum. 

Junior  Training  Course 
Elementary — Three  Weeks  in  Agency 
The  new  junior  just  started  is  expected  to  remain  in 
the  agency  office  studying  and  learning  the  application  of 
the  machine  for  at  least  three  weeks  before  starting  in  the 
field.  This  course  is  arranged  so  that  he  can  alternate  his 
study  between  listing  machines  in  the  morning  and  calculat- 
ing machines  in  the  afternoon,  but  he  will  be  required  to 
thoroughly  master  this  material  and  pass  a  satisfactory 
grade  on  an  examination  before  permitted  to  go  into  the 
field  at  all. 

If,    as    a    prospective    salesman,    he    has    covered    the 
material  outlined  in  the  foregoing  courses,  he  will,  of  course. 


lit)        PROHI.KMS  IN  SALES  MANAGEMENT 

save  consiclerul)l('  tiiiu'  as  llu'  lualcrial  covered  m  the  pros- 
pective courses  is  the  same  as  that  recoininended  for  the 
first  week,  and  also  iiichides  the  300  ( 'Uiss  verbatim  demon- 
stration. A  junior  shouhl  not  he  put  out  in  tlie  fiehl  sohcit- 
ing  trials  or  callinji;  on  prospects  until  he  has  thoroughly 
mastered  all  of  this  elementary  course. 

Selling;    ihk  Burroughs — (First  Section) 

Trdininrj  Course  for  New  Salesmen 
Learn  to  ajiply  the  314  to  all  the  uses  outlined  in   the 
training  course. 

Calculator  Inslruclion 
Elementary    insti'uction  covei'ing  half-day  cacii  foi'  ten 
days. 

300  Class  Standard  Demonstration 
Must  be  learned  verbatim  and  junior  must   be  able  to 
give  it  satisfactorily  before  agency  manager. 

Elementary  Bookkeeping  Coiirse 
A  five-day  course  which  gives  a  num  a  fair  picture  of 
the  theory  of  bookkeeping  and  explains  in  a  simple  way 
the  common  terms  and  applications  of  a   I^urroughs  for 
bookkeeping  figure  work. 

A  Portfolio 
Basic  material  for  the  construction  and  building  of  a 
portfolio  will  be  furnished  and  the  text  on  the  construction 
and  use  of  the  portfolio  will  l)e  furnished  for  the  guidance 
of  the  new  man.  He  will  be  required  to  start  building  a 
creditable  portfolio  and  to  be  al)le  to  use  it  to  advantage. 

Examinations 

Examinations  will  be  given  on  each  of  the  foregoing 
units  and  the}'  wi'l  be  prepared  and  furnish(>d  by  the  Home 
Office.  The  ag(Micy  manager  will  be  expected  to  do  the 
grading  on  this  material  and  will  be  held  strictly  account- 
able for  the  performance  of  the  junior  and  the  results  of 
the  grades. 

Junior  at  this  point  is  now  ready  to  start  out  in  the 
field  working  with  a  senior  sah^sman  who  is  expected  to 
coach  him  and  help  him  for  some  time  before  putting  him 
on  his  own  resources. 

Junior  Course  Advanced 
This  material  is  to   be  studied  by  the  junior  at  night 
and  during  his  odd  time  as  he  will  now  be  working  in  the 
field  with  a  senior  salesman.    He  will  be  expected  to  average 


MANAGEMENT  OF  SALES  FORCE  441 

two  hours  a  day  on  this  material  for  at  least  two  months 
and  will  be  required  to  pass  an  examination  on  each  of 
these  units  as  fast  as  they  have  been  covered. 

If  the  junior  studies  on  Saturday  afternoons  and  Sun- 
days, during  lunch  hour,  early  in  the  morning,  or  just  after 
finishing  at  night,  it  wil  ro(iuirc  very  little  night  work 
and  will  be  very  easy  for  him  to  average  two  hours  a  day 
for  the  week.  However,  he  would  be  expected  to  spend 
all  the  time  necessary  to  master  this  material  and  with 
the  assistance  which  will  be  given  him  he  should  be  able 
to  cover  this  course  in  two  months  or  sooner. 

Selling  the  Burroughs — (Last  Three  Units) 
A  very  rigid  examination  will  be  given  on  this.     The 
student  will  be  given  approximately  thirty  days  in  which  to 
thoroughly  master  this  text,  but  will  be  required  to  know  it. 

Portfolio 
Building  up  this  portfolio  to  a  point  of  efficiency  and 
learning  to  use  it  to  secure  the  best  results  from  it  will 
require  his  attention  for  about  a  week. 

Calcidator  Instruction 
An  advanced  course  of  study  requiring  about  fifteen 
hours  of  study  and  p  actice  with  the  machine  at  which  he 
will  devote  his  odd  time  for  a  week. 

Statement  Machine  Practice 
The  standard  statement  demonstration  on  the  334B. 
Student  will  not  be  required  to  learn  this  word  for  word,  but 
he  will  be  expected  to  be  able  to  give  a  good  demonstration 
of  it,  and  it  is  recommended  that  he  run  the  statements  in 
some  PB's  office  in  order  to  demonstrate  the  machine  and 
become  familiar  with  its  use  himself.  About  a  week  for 
this. 

Duplex  Instruction 
Illustrating  the  uses  and  applications  of  the  9-column 
Duplex  machine  both  with  and  without  the  shuttle.  He 
will  be  required  to  familiarize  himself  thoroughly  with  the 
demonstration  of  this  machine  and  exploit  its  many  advan- 
tages. Text  and  instructions  will  be  available  as  well  as 
portfolio  material  and  he  should  master  this  in  about  fifteen 
hours  or  one  week's  study 

Examinations 
Examinations  will  be  given  on  each  of  these  units  by 
the  district  instructor  who  will  examine  each  man  person- 
ally and  grade  him.     The  material  will  be  sent  him  direct 


442        PKOBLIOMS  IN  8ALKS  MANAGEMENT 

from  tho  Iloinc  Ofricc  or  district  office  as  provided  for 
by  the  district  instructor.  After  the  junior  has  (jualitied  on 
the  text  up  to  this  point,  he  is  then  elifz;il)le  \o  attend  a  dis- 
trict school  which  will  Ix'  a\'ailal>Ie  from  tinu^  to  time  during 
the  year,  and  which  will  Ix-  in  the  nature  of  a  finishing 
school. 

He  will  be  expected  to  attend  the  first  school  that 
is  held  in  his  immediate  lUMghborhood.  If  there  should  not 
happen  to  be  a  school  being  held  about  this  time,  he  will 
continue  his  studies  continuing  on  into  the  elementary 
senior  mat(M-ial,  but  will  be  recjuired  to  attend  the;  first  ad- 
vanced junior  school  lu.'ld  in  his  immediate  neighborhood  by 
the  district  instructor. 

District  School 

This  will  consist  of  two  weeks'  training  covering  the  fol- 
lowing major  subjects. 

Completion  of  Bookkeeping 
Student  will  be  required  to  post  and  take  off  balance 
sheets  for  thirty  days'  work  and  thoroughly  understand  the 
principles  of  bookkeeping. 

Approach,  Demonstration,  Closing— All  A  Machines 

This  includes  100,  200,  300,  400  and  500  Class  machines. 

Comparison  of  All  A  and  C  machines  bringing  out  relative 
advantages. 

Advertising  Use. 

A  Class  Retail  System. 

Completion  of  Calculator  Instructions. 

Up  to  this  point  the  student  will  have  approximated 
about  three  months. 

Elementary  Senior  Course 

The  senior  is  supposed  to  be  thoroughly  posted  on  all 
of  the  material  included  in  the  foregoing  junior  courses. 
After  he  has  answered  the  questionnaire  on  this  material 
and  has  demonstrated  his  fitness  to  take  up  the  senior 
work,  at  this  point  he  will  begin  the  first  subject  of  the 
Elementary  Senior  Course.  The  junior  will  continue  his 
studies,  taking  up  these  suljjects  in  their  regular  order,  and 
qualif}'  himself  for  the  position  of  senior  when  an  opening 
occurs. 

Installation  Instructions 

Instructions  on  the  proper  way  to  make  an  installation 
to  secure  the  best  results.  A  short  text,  but  a  very  impor- 
tant one. 


I 


MANAGEMENT  OF  SALES  FORCE  443 

Standard  600  Class  Demonstration 
To  be  learned  verbatim.  This  will  cover  the  standard 
model  from  a  commercial  standpoint,  and  elaboration  on 
this  text  will  give  the  man  a  vast  amount  of  selling  material. 
It  will  handle  the  situation  from  the  standpoint  of  the 
present  Burroughs  user,  the  forcugn  machine  user,  and  the 
foreign  machine  prospective  purchaser. 

Instruction  on  the  Complete  Application  of  the  Stand- 
ard B  Models— 646A,  656E,  (37()E,  246H,  676G,  276A. 
This  will  show  possibilities  of  the  standard  line  and  the 
many  applications  which  are  possible  under  varying  con- 
ditions. 

Bank  Applications 
The  most  general  bank  applications  of  our  standard  line. 

Triplicate  Sales  Tickets 
A  short  text  on  the  use  of  triplicate  sales  tickets  in- 
cluding the  filing.    This  material  will  tie  up  with  the  port- 
folio material. 

Examinations 

Examinations  will  be  given  on  each  of  the  foregoing 
units  and  the  salesman  will  be  expected  to  be  reasonably 
well  posted  on  each  of  these  subjects  up  to  this  point.  It 
is  expected  that  the  elementary  senior  course  will  require 
approximately  six  weeks,  which  we  believe  gives  plenty  of 
time  for  the  leisurely  and  convenient  study  of  these  units. 

Salesman  is  now  eligible  to  attend  B  Class  school  to 
be  held  by  the  district.  He  will  be  expected  to  attend  the 
first  B  Class  school  held  in  his  immediate  neighborhood 
which  will  be  in  the  nature  of  an  elementary  senior  B  Class 
school. 

B  Selling  School  for  Seniors 
To  require  approximately  two  weeks  and  to  be  held  by 
district  for  small  groups  of  agencies  covering  B  Class  retail 
systems.  This  subject  will  be  covered  in  detail  and  the 
men  will  be  schooled  on  the  approach,  presentation  and 
actual  close,  as  well  as  the  installation  of  the  complete 
system. 

Merchandising 
The  value  of  figures  and  their  relation  to  subjects  such 
as  average  mark-up,  figuring  turnovers,  figuring  selling 
price,  making  profit  and  loss  statements,  etc.,  will  be  cov- 
ered in  this  course  and  salesman  will  be  given  real  selling 
information. 


444         PHOHLMMS  IN  SALKS  MANACJEMENT 

Custonicrs'  Sldtenienls 
There  ;ire  approxiniately  v\ii}\{  ways  to  make  eustoniers' 
statements  in  coniuH'tion  with  our  B  Chiss  maehines  and 
these  will  be  covered  in  detail,  (^xplainin^  the  advantages 
and  disadvantages  of  each  method. 

Analysis 
Analysis  of   the   eojulitions  existing   in   the   PB's  office 
and  conditions  which  must  l)e   m(>t  when  recommending 
equipment,    making    written    propositions,    or   estimating 
the  saving  to  he  mad(>  and  results  effected. 

B  Portfolio 
The  construction  and  us(>  of  the  B  Class  portfolio. 
Approach,    Presentation,    Sales    Talk    and     Close — 

B  Machines. 
Written  Proposition. 
How  to  make  uj),  when  to  use,  and  how  to  secure  best 
results  from  the  written  proposition. 

Comparison  of  Various  Bookkeeping  Machines 
Describing  the  advantages  and  disadvantages  of  each 
style. 

Advanced  Senior  B  Instructions 
These  units  will  be  mailed  direct  to  the  salesman  when 
he  completes  the  previous  text,  and  he  will  continue  putting 
in  his  spare  time  and  efforts  on  this  material.  This  ie 
material  which  every  senior  Burroughs  salesman  should 
know  and  material  which  a  great  many  men  do  know. 
Where  the  salesman  is  familiar  with  the  subject  matter,  it 
will  require  practically  no  study  on  his  part.  Plenty  of 
time  will  be  given  for  the  complete  mastery  of  each  unit 
and  the  salesman  will  be  graded  personally  by  the  district 
instructor  at  intervals  of  approximately  every  sixty  days. 

Demonstration,  Application  and  Sales  Possibilities  of  Each 
Standard  B  Model 
This  should  be  easily  covered  in  thirty  days. 

Routine,  Office  Methods  and  Installations 

Meaning  outline  of  the  routine  which  common  trans- 
act ons  follow  in  certain  lines  of  business  and  the  office 
methods  of  handling  the  records  generally  in  vogue,  and 
how  they  affect  installations  and  how  they  should  be  pro- 
vided for. 


MANAGEMENT  OF  SALES  FORCE  445 

Commercial  Stock  Records 
As  distinguished  from  manufacturing  stock  records. 
Department  Stores — (Both  large  an(i  small) 
Installment  Houses. 
Commercial  Distributions. 

Covers  distribution  of  sales,  purchases,  expenses,  etc. 
City,  County  and  State. 
Detailed  Analysis  Local  Installations. 

Detailed  analysis  of  his  best  local  installation  to  be 
made  by  salesnum,  and  he  is  to  furnish  samples  of  posting 
media,  ledger  forms,  statements,  proof  forms  and  a  routine 
chart  showing  just  how  the  posting  operation  is  routed, 
together  with  the  complete  data  on  the  number  of  postings, 
time  required,  etc.  This  material  will  bo  re-distributed  to 
the  field  in  reproduced  form  and  will  make  very  valuable 
selling  material  for  other  members  of  the  force. 

Building  and  Loan  Associations. 
Savings  Banks. 

Bank  Accounting — (Both  large  and  small). 
Unusual  Applications  and  Uses. 

Showing  unusual  conditions  where  clever  applications  of 
standard  models  have  resulted  in  sales  and  will  probably 
secure  more  business  for  other  salesmen. 

Manufacturing  Stock  Records. 
Manufacturing  Distributions. 
Payrolls. 
Public  Utilities. 

Allowing  ample  time  for  the  salesman  to  cover  each 
subject  without  placing  very  much  of  a  burden  on  him  or 
requiring  too  much  night  work,  will  require  approximately 
one  year  to  reach  this  point.  It  is  understood,  of  course, 
that  many  salesmen  will  require  much  longer  than  this, 
whereas  others  who  learn  rapidly  and  who  are  good  stu- 
dents will  reach  this  mark  much  sooner.  The  time  element 
is  not  a  serious  one  as  long  as  the  salesman  indicates  his 
willingness  to  spend  a  reasonable  amount  of  effort  to  better 
himself. 

It  is  very  hard  to  estimate  the  length  of  time  different 
men  of  different  natures  will  require  to  finish  a  given  text. 
It  can  only  be  approximated.  We  believe,  however,  that 
this  establishes  more  of  an  ideal  than  an  average  and 
we  have  no  intention  of  placing  an  unreasonable  burden  on 
our  salesmen. 

It  is  to  his  interest  to  master  these  various  subjects 
as  soon  as  he  can,  and  we  feel  that  he  would  be  glad  to 
avail  himself  of  every  opportunity  to  do  so.     We  do  not 


446        PROBLEMS  IN  SALI'.S  MANAGEMENT 

believe  that  any  tnoro  (•iicour.ijiciiicnt  will  bo  necessary 
than  the  fact  that  it  is  to  his  <j;n'atest  interest.  Tlierefore, 
the  time  approximated  sJKtuid  not  be  considered  as  a 
serious  re(niiremeid  as  loiiji  as  conscientious  efforts  are 
beiii^i  put  forth. 

(Jucslioii.'i 

1.  What  are  the  advantages  and  disadvantages 
of  the  plan  of  })n)\iding  study  courses  for  senior  sales- 
men as  well  as  for  juniors  and  new  recruits? 

2.  Is  the  course  so  planned  as  to  train  the  sales 
force  along  the  lines  which  will  lead  to  increased  busi- 
ness and  good  will  for  the  l^ui-roughs  Company? 


Problem  258 
Salary-Plus-Commission  Compensation  for  Salesmen 

The  sales  manager  of  a  large  paint  manufacturing 
concern,  having  sales  offices  in  nine  cities  of  the  United 
States,  writes  as  follows  concerning  his  method  of 
paying  salesmen,: 

Our  plan  of  payinji;  salesmen  is  the  salary  and  com- 
mission over  a  quota  plan;  and  while  we  have  found  it  to 
be  better  than  our  former  plan  of  straight  salary  pa^anent, 
the  method  now  in  use  still  leaves  much  to  be  desired. 
The  principle  on  which  we  work  is  to  pay  each  salesman  a 
fair  wage  and  allow  all  reasonable  expenses  while  traveling 
on  the  road.  In  addition  to  this,  in  order  to  stimulate  his 
effort  and  enable  him  to  share  in  the  results  of  his  industry, 
at  the  beginning  of  our  fiscal  year  we  determine  what 
amount  of  sal(\s  in  each  territory  it  is  fair  for  us  to  expect 
as  a  minimum  point.  This  is  then  called  the  quota,  and  on 
all  sales  over  this  amount  a  connnission  is  paid  to  the 
salesmen. 

It  will  at  once  l)e  manifest  to  3'ou  that  the  success  or 
failure  of  this  plan  rests  largely  upon  the  proper  determi- 
nation of  quota  points,  and  you  will  also  realize  that  this 


MANAGEMENT  OF  SALES  FORCE  447 

determination  should  be  influenced  by  a  number  of  im- 
portant factors.  The  time  the  salesman  has  been  with 
the  company,  the  amount  of  business  on  the  territory  when 
the  salesman  took  it,  the  productiveness  of  the  territory 
and  the  possibility  of  future  development,  the  expense  of 
getting  business  on  the  territory,  and  the  salary  that  the 
salesman  draws  are  some  of  the  more  important  factors 
that  must  be  taken  into  consideration  when  the  quota 
point  is  placed.  In  order  to  insure  that  these  quotas  are 
fixed  as  fairly  as  possible,  the  figure  is  determined  only  after 
consultation  with  the  District  Sales  Manager,  the  General 
Sales  Manager,  his  assistant,  and  the  executive  managers 
of  the  company. 

In  a  period  of  normal  times  any  system  of  this  character 
is  bound  to  operate  more  satisfactorily  than  it  will  during 
abnormal  times  such  as  we  have  been  experiencing  recently. 
In  order  to  derive  satisfactory  results  from  this  system,  or 
from  any  other  under  such  abnormal  conditions,  it  is  our 
opinion  that  the  plan  should  be  sufficiently  flexible  to 
permit  of  the  exercise  of  good  judgment  on  the  part  of  the 
management  to  allow  for  the  varying  conditions,  rather 
than  to  have  a  fixed  policy  from  which  there  can  be  no 
variation. 

For  example,  our  original  plan  was  that,  so  long  as  a 
salesman  remained  on  his  old  territory,  his  salary  would 
be  unchanged,  and  his  quota  point  would  be  raised  from 
year  to  year  until  the  time  was  reached  when  the  salary 
plus  his  commission  plus  his  traveling  expense  would, 
when  figured  against  the  business  of  that  territory,  show  a 
selling  expense  for  that  territory  no  greater  than  the  aver- 
age selling  expense  for  our  business.  On  territories  where 
this  condition  already  prevailed,  the  salary  and  the  quota 
point  were  not  to  be  changed. 

While  it  may  be  that  this  plan  could  be  worked  out 
under  normal  times,  the  great  change  in  economic  condi- 
tions resulting  from  the  war  and  the  subsequent  period  of 
inflation  made  it  impossible  for  us  to  carry  out  this  original 
plan,  because  we  were  forced  to  raise  salaries  in  order  to 
retain  our  salesmen  and  also  our  expenses  increased  greatly 
along  with  the  expenses  of  every  one.  Furthermore,  a 
fixed  plan  and  policy  that  could  not  be  changed  made  it 
almost  impossible  for  us  to  change  territory  lines  in  order 
to  develop  the  business  more  rapidly,  because  a  salesman 
would  object  to  having  his  territory  reduced  or  changed  in 
any  way. 

We,  therefore,  reached  the  conclusion  that  it  is  a  very 
difficult  matter  to  work  out  a  plan  of  this  kind  that  will 


448        rilUBLEMS  IN  SALES  MANAGEMENT 

extoiul  over  a  miinlxT  of  years  in  the  future,  because  the 
resuhs  are  wonderfully  influencetl  by  conditions,  and  it  is 
very  difficult  to  projihesy  what  those  conditions  will  be. 
We  i)eli(>ve,  rather,  that  the  matter  sliould  l)e  left  largely 
in  the  hands  of  those  responsible  for  tlie  management  of 
the  business  and  its  various  departments,  and  we  think 
better  results  will  be  obtained  in  this  way,  provided,  of 
course,  it  is  the  disposition  of  those  in  authority  to  deal 
fairly  with  those  in  the  organization. 

In  addition  to  the  above  plan,  we  have  also  found  it 
advantageous  to  us  to  pay  a  cash  bonus  to  each  salesman 
that  opens  up  a  new  dealer  agent  account  for  us,  provided 
the  new  dealer  agent  meets  the  requirements  both  as  to 
size  and  character  of  order  that  we  think  should  be  met 
before  an  account  can  be  accepted  as  a  dealer  agent. 

Question 

Do  you  agree  with  the  conclusions  expressed  in  this 
letter? 


Problem  259 
Reducing  Rate  of  Commission 

Many  concerns,  during  the  depression  beginning  in 
1920,  were  confronted  by  the  problems  of  salesmen's 
compensation.  The  manager  of  the  Balfour  Shoe 
Company  is  undecided  as  to  whether  it  would  be  wise 
to  reduce  the  rate  of  commissions  along  with  the  wages 
paid  employees  of  the  factory.  There  has  been  a  20% 
reduction  in  factory  wages  and  a  10%  reduction  in 
salaries  of  office  force,  but  up  to  date  no  change  has 
been  made  in  the  commission  paid  salesmen.  Com- 
missions, prior  to  the  war,  amounted  to  G%  which 
for  good  salesmen  gave  a  yearly  income  of  from  $4,000 
to  $10,000,  depending  upon  volume  of  sales.  During 
the  war,  with  the  increased  sales  and  particularly  the 


MANAGEMENT  OF  SALES  FORCE  449 

increased  price,  it  was  by  no  means  uncommon  for  a 
salesman  to  accumulate  commissions  ranging  from 
$10,000  to  $20,000  per  year.  For  the  first  season 
since  the  slump,  figures  show  that  salesmen  are  still 
getting  a  higher  compensation  than  before  the  war. 
The  Balfour  Company  has  been  forced  to  take  severe 
losses  on  account  of  inventory  and  it  is  necessary  to 
effect  economies.  It  is  argued  that  salesmen,  more 
than  other  employees,  should  share  in  the  profits  of 
a  business  and  they  have  done  so  through  the  higher 
commissions  in  the  war  period.  It  is  also  claimed 
that  they  should  share  in  the  losses  and  that  they 
should  not  be  disgruntled  if,  when  the  business  is  not 
prosperous,  commissions  and  salaries  are  cut.  On 
the  other  hand,  the  argument  is  brought  up  that  the 
prosperity  of  a  business  depends  upon  a  successful 
selling  season,  the  chances  of  which  will  be  greatly 
decreased  if  the  rate  of  commissions  and  salaries  is 
cut.  It  is  argued  that,  instead  of  cutting  salaries, 
salesmen  should  be  urged  to  work  harder,  increase 
their  working  hours  and  endeavor  to  get  as  large  an 
amount  of  orders  as  in  previous  normal  years. 

Question 
What  should  be  done? 


Problem  260 
Compensation  of  Salesmen 

Randolph  Perry  and  Brother,  manufacturers  of 
women's  trade-marked  garments,  pay  their  salesmen 
a  commission  of  73^%,  salesmen  paying  their  own 
expenses.  Salesmen  in  the  home  territory  of  Ohio 
receive  the  same  commission  as  those  located  in  the 
far  western  territory.     The  sales  manager  feels  that 


450       PKOHI.KMS  IN  SALES  MANAGEMENT 

this  is  not  a  just  basis,  because  the  expenses  of  the 
salesmen  in  the  far  western  territory  are  considerably 
greater  than  those  in  local  territory. 

Question 
Can  a  workable  plan  be  devised  which  will  equalize 
income,  without  losing;  the  chief  advantage  of  a  com- 
mission plan  or  departing  from  the  practice  of  leaving 
control  of  expense  in  hands  of  salesmen? 


Problem  261 

Salesmen's  Commissions  in  the  Wholesale 

Grocery  Business* 

The  John  Sagamore  Company  conducts  a  wholesale 
grocery  business  in  Pittsburgh,  Pennsylvania,  covering 
the  trade  within  a  radius  of  about  150  miles  of  that 
city.  The  salesmen  of  the  firm,  prior  to  June  1921, 
had  been  paid  on  the  salary  basis,  but  at  that  time  the 
management  decided  to  adopt  a  commission  basis  of 
pajniient  on  net  profits.  Discussion  arose  among  the 
executives  of  the  company  as  to  just  what  should  be 
deducted  from  gross  profits  in  order  to  arrive  at  a 
figure  on  which  to  base  commissions  to  salesmen. 
Since  the  management  was  desirous  of  setting  down 
at  the  start  a  clearly  defined  policy  as  to  the  basis 
for  commissions,  the  various  executives  sought  informa- 
tion through  the  Harvard  Bureau  of  Business  Research 
as  to  standards  of  practice.  The  Bureau  conducted 
an  inquiry  and  was  able  to  collect  the  following  in- 
formation concerning  methods  used  b}^  six  typical 
wholesale  grocers  in  different  parts  of  the  country 
operating  on  a  so-called  "commission  on  net  profits  ' 

*Harvard  Bureau  of  Business  Research,  Bulletins  No.  8,9,  H  and  2J^. 


I 


MANAGEMENT  OF  SALES  FORCE  451 

system  of  payment.     The  questions  asked  and  the 
answers  obtained  are  given. 

(1)  What  percentage  over  and  above  incoming 
freight  and  cartage  is  added  to  the  cost  of 
goods  for  handhng  through  the  warehouse 
to  the  shipping  door?  In  reply  to  this  ques- 
tion, three  firms  stated  that  they  made  no 
addition  over  and  above  incoming  freight 
and  cartage  for  the  expense  of  handhng 
goods  through  the  warehouse  to  the  shipping 
door.  One  of  them,  however,  expressed 
the  intention  of  charging  1%  on  sales  to  cover 
this  item.  One  firm  added  approximately 
2%,  and  another  5%  over  and  above  incom- 
ing freight.  The  sixth  firm  described  its 
practice  as  follows:  "On  a  flat  market  we 
add  nothing  over  and  above  the  incoming 
freight  and  cartage  to  the  cost  of  goods  which 
we  give  our  salesmen.  When  a  market 
permits  we  reserve  the  privilege  of  advancing 
our  cost,  and  on  the  other  hand,  when  a 
market  declines  we  lower  our  cost  irrespective 
of  actual  cost. 

(2)  Is  the  freight  on  outgoing  goods  deducted 
100%  from  net  profits?  If  not,  how  much? 
One  firm  stated  that  it  did  not  pay  freight, 
while  five  deducted  the  entire  freight  on 
the  outgoing  goods  from  the  gross    profits. 

(3)  Is  cartage  on  outgoing  goods  deducted  100% 
from  net  profits?  If  not,  how  much?  Three 
firms  made  no  deduction  for  cartage  on  out- 
going merchandise;  three  deducted  the  entire 
cost  of  outgoing  cartage  from  gross  profits. 

(4)  If  a  salesman  has  a  loss  due  to  a  bad  account, 
is  this  loss  taken  out  of  his  net  profits?  Four 
firms  made  no  deductions  for  bad  debts  before 
determining  the  profits  on  which  the  sales- 
man's commission  was  to  be  paid.  In  one 
other  case,  the  losses  from  bad  debts  were 


452       PROBLEMS  IN  SALES  MANAGEMENT 

not  charged  against  llio  salosnion,  hut  coni- 
niissions  wvvv  not  crcdilfHl  on  accounts  that 
were  not  collected,  or  if  they  had  l)een  credited 
they  were  charj;-ed  hack.  In  tlie  sixth  case, 
the  salesman  was  not  paid  liis  commission 
on  sales  for  which  payment  was  not  collected. 

(5)  How  nuich  is  deducted  from  net  ])rofits  for 
currying  overdue  accounts?  This  was  the 
only  question  for  which  the  answers  all  agreed. 
In  no  case  was  the  deduction  made  by  these 
firms  for  carrying  overdue  accounts. 

(G)  What  other  deductions  are  made  from  gross 
or  net  profits  and  how  are  they  deducted? 
Two  firms  made  no  other  deductions;  two 
firms  deducted  the  freight  and  gross  profit 
on  returned  goods  in  determining  the  profit 
on  which  commissions  were  to  be  paid;  one  of 
these  firms  also  made  a  deduction  for  allow- 
ances made  from  the  firm's  invoice  price  by 
salesmen,  and  any  other  allowance  made 
by  salesmen.  In  the  case  of  the  fifth  firm, 
allowances  and  excess  discounts  were  deducted 
from  the  profits  at  the  time  the  allowance 
was  made,  either  by  payment  to  the  sales- 
man or  direct  to  the  firm.  The  sixth  firm 
deducted  the  allowances,  and  in  addition 
charged  50 /o  on  cigar  samples  and  50%  on 
the  cost  of  bonds  of  salesmen. 

Question 
What  would  be  the  most  advisable  method  for  the 
John    Sagamore   Comjnmy   to   use   in   determining   a 
figure  on  which  to  base  commissions  to  salesmen? 


MANAGEMENT  OF  SALES  FORCE  453 

Problem  262 

Salary,  Commission,  and  Bonus  Payment 

FOR  Salesmen 

A  concern  manufacturing  a  line  of  drug  specialties 
pays  its  salesmen  on  a  salary  and  bonus  basis,  sub- 
stantially as  follows:  Each  salesman  receives  a  salary 
weekly,  which  is  about  sufficient  for  hisliving  expenses. 
In  addition  to  this,  he  receives  a  commission  on  sales 
for  certain  products  which  are  charged  quarterly. 
The  commissions  vary  from  2%  to  10%  and  the 
articles  on  which  commissions  are  paid  are  distributed 
among  the  various  departments.  Commissions  are 
drawn  up  by  the  eighteen  sales  departments  of  the 
concern  and  are  figured  departmentally.  At  the  end 
of  each  quarter,  the  salesman  is  paid  one-half  of  the 
commission  due  him  from  each  department,  the  other 
half  being  retained  until  the  end  of  the  year.  Then, 
if  he  shows  an  increase  in  gross  sales  in  a  department 
over  the  previous  year,  he  receives  the  other  50%  of 
the  commission  which  has  been  accumulating  during 
the  year. 

If  his  sales  do  not  show  an  increase,  he  does  not  re- 
ceive the  other  50%.  Besides  the  commission,  a  bonus 
of  1%  is  paid  by  each  department  on  the  increased 
sales  in  that  department  over  the  preceding  year. 

Questions 

1.  Under  what  conditions  can  this  plan  be  made 
to  operate  smoothly?  Under  what  conditions  might 
it  become  inequitable? 

2.  In  the  figuring  of  this  bonus  and  in  its  payment, 
certain  problems  arise. 


(a)  If  a  salesman  is  asked  to  change  territory,  it 
is  very  likely  that  the  sales  of  some  of  his  depart- 
ments will  be  less  than  the  sales  in  his  former  ter- 
ritory, so  that  in  comparison  he  loses  thereby. 


454        PROHLKMS  IN  SALKS  MANAGEMENT 

(6)  Likewise,  the  urtieles  comprising  a  particular 
department  have  at  times  been  charipjed  from  one 
department  to  another.  In  one  case  of  this  kind,  no 
salesman  showed  an  increase  in  sales  at  the  end  of 
a  year  in  a  certain  department  which  had  been 
trimmed  down. 

What  adjustments  should  be  made  to  meet  these 
cases?  • 


3,  Salesmen  are  not  given  credit  for  mail-orders 
from  their  customers,  the  management  operating  on 
the  theory  that  mail-order  business  should  be  cut 
down  to  a  minimum  and  preferring  that  the  salesman 
spend  more  time  with  his  customers  and  look  more 
fully  after  their  interests. 

It  is  thought  that  to  allow  the  salesman  credit  for 
mail-orders  would  make  him  careless  in  his  visits  to 
customers. 

Do  you  agree? 


Problem  263 
Bonus  Plan  for  Salesmen 

Since  the  control  of  salesmen  involves  to  a  very 
large  extent  distance  and  imperfect  personal  contact 
of  salesmen  with  superiors,  it  seems  to  the  majority 
of  sales  managers  that  some  form  of  incentive  to  take 
the  place  of  constant  personal  supervision  or  "foreman- 
ship"  is  needed.  Generally  speaking,  the  incentive 
that  sales  managers  offer  salesmen  is  in  the  form  of 


MANAGEMENT  OF  SALES  FORCE  455 

money.  This  is  offered  as  a  straight  salary  or  salary 
and  money  earned  through  some  extraordinary  effort 
or  good  salesmanship.  The  salary  or  drawing  account, 
whichever  it  may  be,  is  constant  and  is  paid  at  regular 
intervals.  The  commission  or  bonus,  or  whatever 
the  extra  remuneration  may  be  called,  usually  covers 
a  period  of  six  or  twelve  months.  It  has  been  asserted 
that  sales  managers  make  a  mistake  in  dividing  bonuses 
at  the  end  of  such  long  periods.  It  is  stated  that,  if 
the  quota  is  set  for  a  year's  work,  the  salesman  wdll 
tend  to  postpone  his  activity  until  toward  the  end  of 
the  year  in  the  hope  that  something  will  turn  up  to 
save  the  extra  effort.  If  a  salesman  happens  to  be 
inclined  to  laziness,  he  will  get  under  w^ay  slowly  the 
early  part  of  the  year  and  the  employer  wdll  suffer  in 
consequence.  To  remedy  this  situation  it  is  further 
asserted  that  the  only  way  to  do  is  to  set  short  periods 
and  tie  them  up  to  an  annual  commission  and  a  further 
commission  if  all  of  the  quotas  for  the  shorter  period 
are  also  met  or  obtained. 

Assume  that  a  salesman  named  Jones  sells  a  mixed  line 
of  goods.  He  is  paid  $200  a  month  or  $2,400  a  year  and  is 
told  that  he  will  be  given  a  commission  of  2.4%  on  all 
sales  above  $96,000.  If  he  is  too  self-confident  or  lazy,  he 
may  easily  not  do  his  best  during  the  first  quarter  or  during 
the  second,  yet  make  a  fair  commission  on  what  he  sells 
above  his  quota  at  the  end  of  the  year.  However,  this 
fails  to  give  to  the  concern  an  even  flow  of  business  through- 
out each  month  of  the  year.  It  is  suggested  that,  instead 
of  giving  a  quota  for  the  year,  we  tell  him  hereafter  his 
quota  will  be  $8,000  per  month  and  that  he  will  be  given 
1%  on  what  he  sells  a])ove  that  each  month;  that,  if  he  is 
able  to  sell  more  than  $96,000  during  the  year,  at  the  end 
of  the  year  he  will  be  given  an  extra  1%  on  all  above.  In 
addition  to  the  monthly  and  annual  commissions,  he  will 
be  given  an  extra  commission  of  1%  on  all  he  sells  over 
$96,000  if  he  has  exceeded  his  quota  during  each  of  the 
12  months. 

Question 
Is  this  plan  generally  applicable? 


lot;        1'1{()HIJ;.MS  IX  SALES  MANAGEMENT 

TUOIILEM    2Gt 

Bonus  Plan  for  Salesmen 

Tlic  Au<;iista  C'oinpiiny  inaiiufactures  an  extensive 
line  of  women's  shoes,  which  it  soils  under  widely 
advertised  brands  on  the  exclusive  agency  plan. 
Salesmen  are  trained  in  the  plant  itself.  Up  to  Jan- 
uary 1 ,  1921,  they  were  i)aid  on  a  commission  basis.  It 
was  then  proposed  that  a  salary-and-competitive- 
bonus  basis  be  adopted,  actual  expenses  being  paid 
by  the  house. 

From  (K)*^'^';  to  80%  of  the  income  of  the  different 
salesmen  would  be  derived  from  salaries.  At  the  be- 
ginning of  the  year,  the  management  should  specify 
items  which  were  to  enter  into  the  determination  of 
the  bonus  and  the  weight  each  will  receive;  for  ex- 
ample, increase  in  number  of  pairs  sold,  increase  in 
gross  value  of  sales,  net  profit  returned  to  the  com- 
pany, are  some  of  the  considerations  which  usually 
count  toward  the  bonus. 

Following  are  the  conditions  governing  the  bonus 
plan  as  first  i)roposed: 

Conditions  Governing  the  Distribution 
OF  Bonuses  1921-1922 

Class  No.  1 

SIXTY  POINTS  to  the  credit  of  those  who  show  the 
largest  TOTAL  PROFIT  IN  DOLLARS  AND  CENTS, 
less  actual  road  traveling  expenses,  which  will  be  deducted. 

Explanation: — The  samples  are  classified  by  grades  and  as 
the  better  grade  shoes  are  the  most  profitable,  they  are  the  shoes 
that  it  is  most  to  your  advantage  to  sell,  in  order  to  make  the 
greatest  showing  in  this  class  of  the  Contest. 

The  actual  profit  will  be  figured  on  the  total  Road  Sales  for  the 
entire  year;  the  total  road  traveling  expenses  will  then  be  de- 
ducted and  the  balance  left  will  represent  the  total  profit  realized 
from  each  territory  through  road  sales. 

The  most  important  consideration  in  this  class  is  to  sell  at  all 
times  shoes  which  show  the  best  button,  in  preference  to  shoes 
showing  a  poorer  button;  however,  it  is  necessary  to  sell  the  lower- 
grade  shoes  after  the  dealer  has  purchased  all  of  the  better  grades 
it  is  possible  to  sell  him,  becau.se  the  greater  the  total  sale  you  can 
make  necessarily  means  just  that  much  greater  showing  in  total 
profit  at  the  end  of  the  year. 


MANAGEMENT  OF  SALES  FORCE  457 

Class  No.  2 
THIRTY  POINTS  to  the  credit  of  those  who  LAND 
THE  GREATEST  PER  CENT  OF  NEW  ACCOUNTS. 

Explanation: — This  class  of  the  Contest  will  be  figured  in 
the  same  manner  as  in  previous  Contests  in  which  tliis  class 
entered.  All  the  towns  on  each  salesman's  territory  will  be  classi- 
fied in  accordance  with  their  relative  importance,  the  larger  towns 
being  considered  as  of  more  value  than  the  smaller  towns. 

New  accounts  landed  will  be  figured  as  a  percent  of  the  total 
Jonah  towns  on  the  salesman's  list.  Any  town  in  which  there  is 
an  account  at  present  and  in  which  during  the  period  of  this 
Contest  the  account  is  discontinued,  will  be  considered  lost 
and  will  be  deducted  from  new  accounts  landed. 

A  new  account  will  be  considered  to  have  been  established  only 
if  the  account  is  in  all  respects  satisfactory  and  the  purchase  is 
sufficient  to  justify  the  establishment  of  the  agency. 

Class  No.  3 
TEN  POINTS  to  the  credit  of  those  who  are  of  most 
service  to  the  house  and  who  sell  shoes  as  we  want  them  sold, 
which  inchides  the  following  divisions: 

Selling  the  greatest  possible  number  of  pairs. 

Sending  in  Sample  Suggestions  of  any  kind  at  any  time  during 
the  year,  which  are  of  assistance  in  building  our  sample  lines, 
or  otherwise  assisting. 

Sending  in  General  Suggestions  of  any  kind  which  are  in  any 
way  of  assistance  to  the  business  as  a  whole. 

Selling  goods  as  we  want  them  sold  and  intelligently  following 
instructions  received,  confining  sales  to  12  pair  or  more  to  the 
width,  excepting  AA  and  A. 

Selling  Factory  No.  2  goods  as  sampled,  and  thus  eliminating 
unnecessary  changes. 

Questio7i 
Should  the  plan  be  adopted? 


Problem  265 
Profit  Sharing  for  Salesmen* 

An  Arkansas  wholesale  grocer  claims  that  most 
profit-sharing  plans,  as  applied  to  salesmen,  are  unfair 
for  the  following  reasons : 

(1)  The  interest  of  the  salesman  is  only  in  his  own 
efforts. 

*Bulletin  of  National  Wholesale  Grocers'  Association,  March,  1921. 


.-)S      i>H()Hi,i:ms  i\  s,\i,i:s  management 

(2)  Tie  lias  IK)  share  in  tlic  risk  assumod  hy  tlie 
coiu'crii. 

(3)  Ho  is  not  induced  to  sell  any  j2;()()ds,  except 
such  as  ai)j)eal  to  liim. 

(4)  In  the  sale  of  futures,  the  goods  are  bought  to 
coyer;  and,  when  cancelalions  come,  goods  are 
thrown  hack  on  tlic  house  without  risk  to  salesman. 

(5)  When  goods  an*  shi|)|)ed  out  and  brought  back 
to  the  house,  they  haye  lost  character  with  the  sales- 
man and  the  house  loses  money  on  the  goods. 

(0)  On  sales  made  from  factory  and  not  accepted 
by  buyer  and  thrown  back  on  the  grocer,  the  sales- 
man is  only  charged  back  with  the  profit  he  is  alleged 
to  haye  made,  while  the  house  is  loaded  with  the 
goods  at  a  loss. 

(7)  Interest  rates  haye  doubled  since  these  profit- 
sharing  plans  were  made  and  the  jobber  must  pay 
twice  for  his  borro\yed  capital,  which  increased 
expense  the  salesman  does  not  share. 

(8)  Trucking  to  and  from  the  station  and  to  city 
deliyeries  has  doubled,  and  this  burden  is  borne 
by  the  house. 

(9)  Under  all  present  profit-sharing  plans  known 
to  the  writer,  the  salesman  gets  his  share  of  the  gross 
profits  before  the  Goyernment  taxes  are  paid  by 
the  house;  so  he  does  not  share  in  the  Goyernment 
taxes,  except  in  his  personal  income. 

(10)  Under  the  proposed  plan  of  a  tax  on  sales, 
he  will  not  participate  in  this  tax,  but  it  \vill  be 
shouldered  by  the  house  unless  the  tax  is  permitted 
to  be  added  to  the  inyoice. 

(11)  It  is  fair  that  other  branches  of  seryice  shall 
be  rewarded  by  some  profit-sharing  plan;  and  when 
the  salesman  is  interested  only  in  his  own  profits 
and  not  in  the  profits  and  losses  of  the  house,  this 
plan  hurts  the  house  and  hence  the  fixed-salary 
people. 

(12)  Trayeling  expenses  of  every  description  have 
been  greatly  increased. 


MANAGEMENT  OF  SALES  FORCE  459 

(13)  Salesmen  may  recommend  the  purchase  of 
certain  hnes  and  lose  interest  in  them  to  the  loss  of 
the  house. 

The  remedy  proposed  is  that  of  paying  fixed  salaries 
to  all  employees  except  salesmen  and  arrange  a  division 
of  .the  profits,  after  allowing  8%  on  invested  capital; 
i.  e.,  pay  salesman  a  salary  and  a  bonus  based  upon  the 
results  of  the  house's  business  and  his  share  in  that 
business  based  on  his  sales,  profits  and  losses,  allowing 
the  house  8%  interest  on  invested  capital. 

A  typical  computation  follows: 

Suppose    the    house    has    invested 

capital  of $  750,000.00 

Suppose  it  sells  in  the  year 5,000,000.00 

Suppose  it  has  net  earnings 125,000.00 

Suppose  its  losses  on  bad  debts  are  15,000.00 
Add  the  losses  to  earnings  and  we 

have 140,000.00 

Charge  to  profit  account  8%  on  in- 
vested capital 60,000.00 

Leaves  net  earnings 80,000.00 

This  makes  net  earnings  ori  turn- 
over of 1  6-10% 

Suppose  Jones  has  fixed  salary.  .  .  .  200.00  (per  mo.) 

Suppose  Jones  sells 200,000.00 

Earnings  on  Jones'  sales  at  1.6%.  .  3,200.00 

Jones'  share  of  bad  debts  3-10%...  600.00 

Net  earnings  of  Jones $2,600.00 

If  Jones  has  no  losses,  he  should  be  charged  with 
none,  but  his  profit  account  should  be  charged  with 
his  own  losses  and  not  a  prorated  or  estimated  loss. 
Now  divide  this  $2,600  between  the  house  and  Jones, 
and  you  have  made  Jones  a  partner  with  the  house  on 
a  fifty-fifty  basis.  If  Jones'  average  profits  are  in 
excess  of  the  general,  you  may  divide  the  excess  to 
encourage  Jones  to  work  for  a  profit. 

If  Jones'  average  profits  are  less  than  general  average, 
then  you  would  penalize  him  for  the  deficiency.  Jones 
will  then  have  the  same  interest  in  the  welfare  of  the 
house  as  a  partner  or  stockholder,  whereas  now  he  is 


4t)()        rUOHLKMS   IN   S.\I>ES  MANAC IKAIKNT 

a  proforrod  sliarcholdcr  in  Iho  house's  gains,  with  no 
sliaro  in  its  various  i^inds  of  losses  or  increased  expenses. 
This  will  save  the  house  thousands  of  dollars'  loss 
on  floods  ])erniitted  to  spoil,  on  returned  }j;oods,  on 
canceled  orders  for  future  or  otherwise,  on  jirevention 
of  loss  in  anticipated  decline  in  tlie  market,  because 
Jones  and  the  house  are  partners  and  the  house's 
interest  is  Jones'  interest  in  every  sense. 

Qucfilions 

1.  Do  the  objections  apply  to  profit-sharing  plans 
generally? 

2.  Does   the   proposed    i)lan    meet    the    objections 
presented  against  other  profit-sharing  plans? 


Problem  266 
Stimulation  of  Salesmen 

A  manufacturer  of  metal  beds,  which  are  nationally 
advertised,  employs  approximateh^  5,000  persons. 
The  introduction  of  a  ])rofit-sharing  plan  is  con- 
templated, whereby  a  dividend  is  to  be  paid  to  the 
workers  on  the  basis  of  payroll  at  the  same  rate  paid 
to  the  stockholders  on  the  common  stock.  Every 
worker,  from  the  president  down  to  the  office  boy, 
receives  the  same  percentage  on  his  year's  wages  as 
the  stockholder  receives  upon  his  holdings  of  common 
stock.  Salesmen  are  to  be  treated  the  same  as  any 
other  employees.  The}'  are  now  paid  by  commissions 
on  sales. 

Question 
Would    this    be    effective    as    a    means    of    stim- 
ulating salesmen  to  j)ut  forth  their  best  selling  effort? 


MANAGEMENT  OF  SALES  FORCE  461 

Problem  267 
Compensation  of  Salesmen 

A  wholesale  dry-goods  concern,  with  offices  and 
houses  in  Boston  and  New  York,  specializes  in  under- 
wear and  hosieiy,  handling  neither  ready-to-wear  nor 
piece  goods.     In  the  sales  force  are  five  main  types: 

(1)  General  salesmen  who  handle  the  complete 
line  of  the  company.  Each  has  a  small  territory 
and  usually  covers  it  by  automobile.  Territories 
are  so  small  that  in  many  cases  the  salesman  works 
out  daily  from  his  headquarters.  Routes  are  stipu- 
lated, but  the  salesman  can  use  moi'e  or  less  dis- 
cretion in  the  conduct  of  his  work. 

(2)  Department  and  specialty  stores  in  the  larger 
towns  are  covered  not  by  the  general  salesmen, 
but  by  "department  and  specialty  store  salesmen." 
There  are  three  types:  (a)  those  who  handle 
hosiery  and  underwear  only;  (b)  those  handling 
men's  wear;    (c)  those  handling  all  other  items. 

(3)  Young  men  sent  out  from  the  Boston  office 
with  some  specialty  which  the  management  desires 
to  push.  These  "department  assistant  salesmen," 
as  they  are  called,  may  specialize  at  one  time  on 
handkerchiefs,  at  another  time  on  some  specialty 
in  men's  wear.  The  salaries  and  expenses  of  these 
assistants  are  paid  by  the  company,  while  the 
general  salesman  gets  a  commission  for  the  sales 
that  they  make.  The  purpose  of  the  plan  is  to 
advertise  and  stimulate  both  the  merchant  and  the 
general  salesman  in  pushing  a  particular  product. 

(4)  "General  assistant  salesmen,"  employed  by  the 
general  salesmen,  are  responsible  to  them  and  are 
paid  by  them  from  the  commissions  which  the  general 
salesmen  make.  These  assistants  report  to  the 
general  salesmen,  but  the  office  retains  some  control 
by  requiring  a  weekly  report  of  their  activities. 

(5)  A  group  of  house  salesmen,  who  handle  the 
buyers  as  they  come  into  the  Boston  and  New  York 
stores. 


•1(12        FKOHLKMS  1\  SALK.S  MANACJEMENT 

(a)  Sevoral  prohlcins  nriso  in  connection  witli  this 
arrangeniont.  It  is  gcuicniUy  true  that  the  small 
stores  in  a  city  will  Ix'  covered  by  a  general  man,  while 
the  dei)art merit  and  s|)ecialty  store  salesmen  will 
solicit  the  larger  department  and  specialty  stores. 
When  a  store  develops  so  that  from  the  standpoint 
of  effective  sculling  it  would  he  bettor  to  have  the  depart- 
ment and  specialty  store  salesmen  visit  it,  there 
develops  a  conflict  of  interests  between  the  general 
salesmen  and  the  other  types.  The  general  salesmen 
will  most  strenuously  object  to  giving  up  accounts 
which  might  mean  several  hundred  dollars  apiece  to 
them. 

Question 

How  should  the  sales  manager  handle  the  matter? 


(6)  In  connection  with  the  commission  system  of 
payment  which  the  company  uses,  several  problems 
have  arisen : 

In  the  present  depression,  when  there  is  not  only 
a  fall  in  the  volume  of  sales  but  also  in  prices,  sales- 
men's earnings  have  fallen  to  such  an  extent  that 
they  are  apt  to  be  disgruntled.  This  companj' 
has  not  changed  the  method  of  payment  or  the  rate 
of  commission,  but  has  told  the  salesmen  that  for 
the  past  few  years  they  have  been  simply  order- 
takers  and  it  is  now  necessary  for  them  to  go  out 
and  show  sales  ability. 

Question 
Is  this  sufficient   to  secure   desired   cooperation   of 
salesmen? 


MANAGEMENT  OF  SALES  FORCE  463 

(c)  Since  salesmen  pay  their  own  expenses,  there  is 
a  tendency  in  some  cases  to  economize  more  than  if 
the  company  itself  paid  expenses.  In  certain  cases, 
the  company  feels  that  the  men  may  go  too  far  in 
their  efforts  toward  economy.  Likewise,  hotel  and 
traveling  expenses  are  greatly  advanced  over  the 
period  prior  to  the  war,  and  the  traveling  salesmen 
are  dissatisfied,  feeling  that  the  company  should  either 
increase  commissions  or  assume  part  of  the  expense 
burden. 

Question 
What  action  should  the  company  take? 


Problem  268 

Compensation  for  Several  Classes  of  Salesmen 

IN  the  Same  Concern 

The  wholesale  dry  goods  concern  mentioned  in 
Problem  267  has  adopted  the  following  method  of  pay- 
ing its  five  types  of  salesmen.  First,  general  salesmen 
are  paid  on  a  commission  basis,  while  their  assistants 
are  paid  out  of  the  general  salesmen's  commissions; 
the  department  and  speciahy^-store  salesmen  are  paid 
on  a  commission  basis,  but  given  a  particular  class 
of  customers ;  department  assistant  salesmen  are  paid 
salary  and  expenses  by  the  house,  while  the  general 
man  gets  a  commission  for  the  sales  made  by  the  de- 
partment assistant  salesman;  and  store  salesmen  re- 
ceive their  compensation  on  a  commission  basis. 

The  Wilkinson  Company,  a  concern  selling  a  broader 
hne  of  dry  goods,  employs  three  classes  of  salesmen, 
specialty  men  being  employed  by  the  various  depart- 
ments to  call  upon  bigger  merchants  and  specialty 
stores  with  special  lines  such  as  hosiery,  underwear, 
and  ready-to-wear;  circuit  salesmen,  who  are  used  to 
open  up  new  accounts  and  sell  big  business;  and  two 
sets  of  general-line  salesmen,  who  together  carry  the 


KM         FK()HL1:MS  in  SALIOS  MANAGEMENT 

full  liii(\  one  j2;r()up  carryinp;  the  piece  goods  and  the 
other  such  articles  as  liosiery,  handkerchiefs,  laces, 
etc.     The  general  salesmen  demand  credit  on  all  sales 

to   customcM's   ill    their   IcMM'itories. 

ijucslion 
Present  a  workable  j)lan  for  compensation  of  these 
different  classes  of  salesmen  of  the   ^\'ilkinson  Com- 
pany working  the  same  territory. 


Problem  269 
Compensation  of  Salesmen* 

Question 
(1)  "How  do  you  credit  salesmen  with  business 
received  from  chain  stores  in  cases  where  one  sales- 
man's efforts  result  in  a  branch  manager  making 
requisition  for  goods,  which  must  be  purchased  by 
general  purchasing  agent  in  home  office  located  out 
of  salesman's  territory?'' 


(2)  "Suppose  one  of  your  salesmen  called  on  the 
purchasing  agent  of  Fairbanks,  Morse  &  Co.  at  Chicago, 
who  referred  him  to  the  superintendent  of  the  Beloit, 
Wisconsin,  plant.  The  Wisconsin  salesman  sells  the 
plant  superintendent  at  Beloit,  but  the  Chicago  sales- 
man actualh'  secures  the  signed  order  from  the  pur- 
chasing agent  at  Chicago, 

Question 
*'Who  would  secure  the  commission? 
Or  would  it  be  divided?" 

*Sales  Management,  August,  1921 — To  Whojn  Should  the  Credit  Gof 


MANAGEMENT  OF  SALES  FORCE  465 

(3)  "A  Chicago  manufacturer  has  a  representative 
in  Boston.  The  home  office  of  the  Chicago  manu- 
facturer sells  a  large  concern  in  Boston  without  the 
aid  of  the  salesman,  who  has  had  the  opportunity  to 
call  on  this  Boston  concern.  The  salesman  claims 
credit,  banking  on  a  technicality  in  his  contract  which 
calls  for  commission  on  all  goods  sold  in  his  territory, 
including  mail  orders.  Later  the  business  develops 
and  the  Boston  concern  buys  at  Boston  for  its  branches 
all  over  the  country. 

Question 
"Is  the  salesman  entitled  to  the  credit  for  the  busi- 
ness; and,  if  so,  is  he  entitled  to  credit  for  orders  being 
shipped  to  all  parts  of  the  country?" 


(4)  "A  lumber  manufacturer  has  saw  mills  in 
Oregon,  Louisiana  and  Minnesota.  His  office  is  in 
Chicago.  The  Louisiana  salesman  for  a  belting  con- 
cern sells  the  superintendent  of  the  Louisiana  mill, 
who  makes  a  requisition  on  the  Chicago  purchasing 
agent.  The  Chicago  purchasing  agent  gives  the  order 
to  the  Chicago  representative  of  the  belting  concern. 
Both  salesmen  claim  credit.  Who  is  entitled  to  it? 
Later  the  Chicago  salesman,  through  his  efforts, 
induces  the  purchasing  agent  to  standardize  on  belting 
for  all  three  mills.  The  Chicago  salesman  then  claims 
commission  on  all  business,  while  the  Oregon  and 
Minnesota  salesmen  claim  commission  because  the 
belting  is  shipped  into  their  territory. 

Question 
''Who  is  right?" 


400        PKOHLllMS  IN  SALKS  MANAGEMENT 

(5)  "The  sales  manager  of  a  concern  originates 
a  valuable  account  in  open  territory.  The  business 
continues  to  come  in  by  mail  after  the  territory  is 
filled   witli   a  salesman. 

Question 
"Is  the  salesman   entitled   to  credit  on    these   mail 
orders?" 


(6)  "A  salesman  working  on  a  commission  basis 
makes  a  trip  o\er  several  states  where  there  is  no 
salesman.  Later  he  is  assigned  a  permanent  territory 
outside  these  states. 

Question 
"Is  he  entitled  to  commission  on  repeat  orders  from 
these  states  as  long  as  they  are  open  territory?" 


Problem  270 
Compensation  of  Sales  Force 

The  White  and  Kendall  Company,  manufacturing 
a  line  of  printed  and  hthographed  goods — calendars, 
posters,  novelties,  etc. — has  during  the  past  five  years 
increased  the  payment  of  salesmen  in  response  to  their 
demand  for  increased  compensation  to  offset  the  high 
cost  of  living.  Commissions  earned  by  the  salesmen 
of  this  concern  during  the  last  eight  months  show  an 
increase  of  75%  per  man  over  the  same  time  during 
1914.  No  war  bonuses  were  allowed,  and  the  rates 
of  commission  are  practically  the  same  today  as  they 
were  four  years  ago. 

The  White  and  Kendall  Company  have  in  the  past 
had  two  forms  of  salesmen's  contracts — a  salary  and 
a  commission.     Any  salesman  on  salary  contract  has 


MANAGEMENT  OF  SALES  FORCE  467 

had  to  itemize  his  expenses  daily  in  order  to  get  credit 
for  them  at  the  end  of  the  month.  Today  the  com- 
pany is  working  largely  on  commission  contracts; 
and,  by  comparing  daily  reports  of  salesmen  from  1916 
to  1919,  they  get  the  following  averages:  in  1910  the 
average  volume  of  business  of  each  man  was  $15,397; 
in  1919  it  was  $28,805.  Their  average  yearly  expenses 
were  in  1916,  $1,100;  in  1919,  $1,320.  The  actual 
percentage  of  total  traveling  expenses  to  volume  of 
business  done  by  these  men  was  reduced  from  7.8% 
to  5.5%.  In  other  words,  what  are  classified  as 
legitimate  traveling  expenses,  between  the  years  1916 
and  1919  (inclusive)  rose  in  far  less  proportion  than 
actual  living  expenses,  although  it  is  quite  possible 
that  the  salesmen  exercised  greater  economy.  During 
the  same  period,  the  per  cent  of  these  expenses  for 
railroad  fares,  as  compared  to  the  total  expenses  listed, 
remained  the  same,  37%.  Of  this,  railroad  expenses 
took  up  an  average  of  $488.40. 

Business  conditions  are  getting  tighter.  It  will 
take  more  work  to  sell  goods  from  now  on.  On  that 
account,  and  on  account  of  increase  in  railroad  and 
other  expenses,  the  salesmen  demand  an  increased 
rate  of  commission  (June  1920). 

Question 
Should    the    sales    manager    advise    granting    the 
increase? 


408        PKOBLKM8  IN  SALES  MANAGEMENT 

Problem  271 

(  "o.mi'knsatio.v  of  salesmen 

The  follow  iii^  is  taken  from  the  sales  manual  of 
Curtis  &  Nye  Coiiii)aiiy,  a  lactic  niaimfacturer  of  men's 
work  «i;arnioiits. 

CoNTKACT 

The  Company  initlici'  requests  nor  accepts  a  contract 
for  sales  services,  it  huviiifi;  l)een  demonstrated  that  con- 
tracts are  wortliless  to  all  parties  concerned. 

Our  sales  plan  is  not  complicated.  H(Mnuneration  is 
based  entirely  on  results.  The  House  is  anxious  to  retain 
the  services  of  a  producer;  one  who  follows  the  rules  of  the 
House,  as  outlined  in  this  booklet. 

If  results  from  a  territory  are  not  satisfactory  to  the 
Company,  they  reserve  the  right  to  make  any  change  that 
is  deemed  advisable.  They  may  reduce,  enlarge  or  change 
boundaries,  transfer  to  anotluM-  field,  or  remove  entirely 
from  the  payroll. 

It  is  expressly  understood  that  the  House  is  not  bound 
by  any  written  or  verbal  agreement,  entered  into  by  two 
or  more  individuals  connected  with  the  Firm,  which  con- 
flict in  any  manner,  shape  or  form  with  this  arrangement. 

A  salesman,  upon  leaving  the  employ  of  the  Company, 
either  of  his  own  volition,  or  at  the  request  of  the  Company, 
retains  his  interest  in  anj'  and  all  orders  which  have  been 
secured  by  him  prior  to  the  time  of  his  removal. 

Commissions  will  be  due  and  payable  according  to  the  out- 
line under  the  subject,  "Salesmen's  Commissions,"  below. 

Concurrent  with  the  time  of  his  removal,  he  will  cease 
to  have  an}^  interest  in  or  participate  in  further  business 
secured  from  the  territory  or  from  any  business  secured 
anywhere,  which  might  be  due  to  his  efforts  while  in  the 
employment  of  the  House. 

Salesmen's  Commissions 

Payable  on  net  sales  the  sixth  of  the  month  following 
the  date  of  shipment. 

Your  account  is  debited  with  conunissions  on  goods  re- 
turned from  3'our  territory-. 

Your  account  is  credited  with: 

Six  per  cent  on  all  dealer  business  secured  b}'  yourself 
for  shipment  into  your  territory. 

Six  per  cent  on  all  dealer  business  secured  by  mail  for 
shipment  into  your  territory. 


MANAGEMENT  OF  SALES  FORCE  469 

Three  per  cent  on  dealer  business  secured  by  yourself, 
but  shipped  and  billed  into  a  territor}^  other  than  your  own. 

One  and  one-half  per  cent  on  business  secured  in  another 
territory,  shipped  into  your  territory,  but  billed  to  still 
another  territory.  (In  a  case  of  this  kind,  salesman  secur- 
ing the  order  receives  three  per  cent,  salesman  occupying 
the  territory  where  goods  are  billed  one  and  one-half 
per  cent,  salesman  occupying  territory  where  goods  are 
shipped  one  and  one-half  per  cent.) 

Three  per  cent  on  industrial  business  secured  in  another 
territory  and  shipped  into  your  territory, 

Three  per  cent  on  industrial  business  secured  by  you 
personally  and  shipped  into  another  territory. 

Parcel  post  charges  or  prepaid  freight  or  express 
charges  are  shown  on  invoices,  but  no  commission  is  allowed, 
other  than  on  invoice  value  of  the  garments  contained  in 
shipment. 

The  Accounting  Department  is  not  infallible;  we  are 
liable  to  make  mistakes;  therefore,  if  our  records  do  not 
coincide  with  yours,  we  gladly  make  up  an  itemized  state- 
ment for  you.  However,  we  expect  you  to  keep  an  accurate 
record  of  your  personal  sales,  and  do  not  believe  that  it 
will  be  necessary  to  call  on  us  for  this  extra  work,  except 
in  exceptional  instances. 

Questions 

1.  Criticise  this  plan  of  compensation. 

2.  Is  the  position  of  the  company  as  to  contracts 
with  salesmen  sound? 


470      pkm)1{|.i:ms  in  sat.ks  management 

PliOHLEM    272 

(Onikact  with  Salksmkn 

TIk'  follow  iii^  is  a  coiili'act  used  by  the  National 
Cash  Register  Coiiipany  to  estabhsh  definitely  its 
relationsliip  with  salesmen: 

Salesman's  Contract 

19. . . . 

Mr.  

(SalcsMuui) 
Ila\iii^  a  .Sales  Agoney  contract  with  The  National 
Cash  liegister  Company,  I  hereby  agree  to  employ  you 
to  sell  cash  rei^isters  and  other  products  furnished  by  said 
Company  in  the  following  territory:  (Give  complete 
description) 

This  contract  is  effective 19 .  .  . 

on  the  following  conditions,  viz.: 

1.  You  are  strictly  to  obey  all  I  lie  rules  and  regula- 
tions of  this  office,  be  governed  by  the  decisions  of  said 
Company,  and  follow  such  instructions  as  may  be  given 
you  from  time  to  time. 

2.  For  the  reason  that  at  conventions  and  conferences 
of  the  sales  agents,  their  salesmen,  and  officers  of  said 
Company  and  in  other  ways,  you  will  obtain  confidential 
information  regarding  the  Company's  business  affairs, 
its  necessities  and  plans,  and  the  names  and  requirements 
of  its  customers,  which  it  would  not  be  fair  nor  right  to 
use  to  its  deti'iment,  you  agree  in  pait  consideration  of 
your  employment  by  n\v  not  to  engage  directly  or  indirectly 
for  yourself  or  as  the  agent  or  employee  of  another,  in 
buying,  selling,  or  dealing  in  cash  registers,  in  the  territorj'^ 
herein  granted,  for  a  period  of  one  year  after  the  termina- 
tion of  this  contract,  without  the  written  consent  of  said 
Company,  and  this  agreement  shall  inure  to  the  benefit 
of  the  Company. 

3.  During  your  continuance  as  salesman  for  me 
under  this  contract  you  are  to  have  and  receive  from  me 
a  conunission  on  all  cash  registei's  sold  for  said  Company 
for  use  in  your  territory,  whether  sold  by  you  or  any  other 
person  in  my  employ,  or  in  the  employ  of  said  Company, 
except  as  hereinafter  provided. 

Your  conunission  to  be  as  follows: 

per  cent  on  the  list  price  of  the   following 

new  registers: 


MANAGEMENT  OF  SALES  FORCE  471 

Class  800  except  Nos.  841,  851,  84G,  856. 

Class  900. 

Class  1700  except  No.  1722. 

All  of  which  are  for  convenience  called  "A"  Grade. 

per  cent  on  the  hst  price  of  the  following 

new  registers: 

Class  100. 

Class  700  except  Nos.  711,  720,  722,  730. 

Class  1000. 

Class  1100  except  1122,  1142. 

No.  841. 

No.  846. 

No.  851. 

No.  856. 

The  N.  C.  R.  Credit  File. 

All  of  which  are  for  convenience  called  "  B  "  Goods. 
per  cent  on  the  list  price  of  the  following: 

The  N.   C.   R.   Electric  Credit  System  Switchboard 

and  Telephones. 

Swivel  Base. 

This  rate  of  commission  also  applies  to  the  selling 
price  of  the  following  second-hand  registers: 

Class  500. 

Class  400. 

79  Principle. 

Class  300  with  tape. 

Class  1000. 

All  of  which  are  for  convenience  called  "C"  Grade. 

per  cent  on  the  list  price  of  the  following 

new  registers: 

Class  One. 

Nos.  1122,  1142. 

No.  1722. 

Class  700  without  tape. 

This  rate  of  commission  also  applies  to  the    selling 
price  of  the  following  second-hand  registers: 

Class  300  without  tape,  except  Nos.  310,  311,  320,  321. 

35  Principle. 

All  of  which  are  for  convenience  called  "D"  Grade. 

per  cent  on  the  selling  price  of  the  following 

second-hand  registers : 

No.  310. 

No.  311. 

No.  320. 

No.  321. 

All  of  which  are  for  convenience  called  "E"  Grade. 


471'        PIlolUJ'.MS   1\  SALES  MANAGEMENT 

In  MO  case  is  the  coiiiiiiission  on  a  sccond-luuul  rcfi;istcr 
to  be  more  tlian  the  latc  (  airicd  by  flic  same  register  when 
sold  as  now. 

In  all  ('as(>s  where  an  excessive  allowance  is  made,  tlie 
cotninission  will  he  figured  on  (he  money  dii't'ei-ence  that 
would  lia\-e  heiMi  paid  had  the  regular  allowance  been 
made,  and  >(»u  will  be  cliarged  with  \-our  pi'opoilion  of 
the  excess. 

4.  Where  an  amount  less  tlian  the  fii'sl  three  reguhir 
payments  is  paid  on  any  cash  register,  and  the  Company 
is  obliged  to  take  tli(>  register  back,  you  are  to  receive  no 
commission,  but  if  you  I'etain  possession  of  the  register 
and  i-es(dl  it  at  tiie  hst  jji-ice  within  six  months,  you  are 
to  receive  from  me  your  reguhu'  commission  on  the  amount 
first  paid,  provided  no  expense  has  been  incurred  in  making 
the  register  sahiljle,  and  not  less  than  three  regular  pay- 
ments have  been  made  on  the  second  sale.  If  such  expense 
has  been  incurred  you  are  to  receive  commission  only  on 
the  second  sale.  On  autographic  registers  you  will  receive 
no  commission  unless  on(>-half  of  the  list  price  has  been 
paid. 

5.  The  National  ('ash  Register  Company  reserves 
the  right  under  my  Sales  Agency  contract  with  it  to  fix 
the  amount  to  be  allowed  on  special  exchanges  of  new 
National  Cash  Registers  for  old  or  for  registers  of  other 
makes.  Where  j^ou  make  a  greater  allowance  for  an  old 
National  register,  or  register  of  another  make,  than  is 
designated  by  the  latest  price  list,  I  reserve  the  right  to 
refuse  such  order. 

6.  W'hen,  in  the  opinion  of  the  Company,  the  general 
conditions  of  the  business  in  any  part  of  the  United  States 
or  Canada  necessitate  the  sale  of  cash  registers  by  said 
Company  through  mediums  other  than  Companj'  offices  or 
regular  sales  agencies,  you  herel)}'  waive  any  claims  to 
commission  on  any  sales  so  made  in  your  territor}'. 

7.  All  orders  taken  by  you  are  to  be  subject  to  the 
approval  and  acceptance  by  said  The  National  Cash 
Register  Company,  as  provided  in  my  Sales  Agency  con- 
tract with  said  Company. 

8.  You  agree  not  to  enter  the  territory  of  any  other 
sales  agent  of  said  Company  for  the  purpose  of  selling  cash 
registers,  or  any  other  products  listed  herein,  or  to  en- 
deavor, directh'  or  indirect!}',  to  make  sales  of  cash  registers, 
or  other  products,  for  use  outside  of  your  territory;  but 
should  a  purchaser  call  on  you  voluntarily  and  purchase 
a  cash  register  or  any  other  product  listed  herein  for  use 
outside  of  your  territory  you  are  to  receive  your  proportion 


MANAGEMENT  OF  SALES  FORCE  473 

of  my  commission  on  the  money  recoivod  from  such  a  sale. 
When  under  like  restrictions,  as  above  providcnl,  any  other 
authorized  sales  agent  of  the  Company  sells  a  cash  register, 
or  any  other  product  listed  herein,  to  be  used  in  3^our  terri- 
tory, your  account  is  to  be  credited  with  your  commission, 
less  your  proportion  of  the  commission  paid  the  sales 
agent  making  the  sale.  On  sales  made  by  or  with  the 
assistance  of  a  Company  salesman  (also  on  sales  made  by 
or  with  the  assistance  of  any  Company  representative, 
who  enters  your  territory  for  the  express  purpose  of  closing 
or  assisting  in  closing  business)  yoiu'  account  is  to  be 
credited  with  your  commission,  less  your  pro]iortion  of 
the  commission  retained  by  the  Company.  These  com- 
missions are  subject  to  the  same  liability  to  be  charged 
back  against  your  account  in  case  of  non-payment  by  the 
purchaser  as  in  other  cases.  This  arrangement  applies 
not  only  to  business  procured  at  the  time  of  the  Company 
salesman's  visit,  but  also  to  all  business  subsequently 
procured  by  you,  the  Company  salesman,  or  someone 
else  other  than  the  Company  salesman,  from  concerns 
previously  worked  upon  by  the  Company  salesman,  pro- 
vided such  business  is  closed  within  six  months  from  the 
date  of  the  Company  salesman's  last  visit,  even  though 
such  visit  may  have  been  during  the  occupancy  of  this 
territory  by  your  predecessor. 

9.  All  claims  for  commission  on  sales  of  cash  registers, 
whether  such  sales  are  made  by  you  or  others  in  your  terri- 
tory, and  all  claims  of  whatsoever  kind,  are  hereby  waived 
by  you  if  not  made  within  one  year  from  the  date  of  can- 
cellation of  this  contract. 

10.  You  agree  that  you  will  not  under  any  circum- 
stances give  any  part  of  \^our  commission  to  any  assistant, 
local  agent,  or  other  person  as  an  inducement  for  him  to 
assist  you  in  making  a  sale,  without  permission. 

11.  Should  you  absent  yourself  from  your  territory, 
without  giving  written  notice  to  me  in  advance,  you  are 
not  to  be  credited  with  the  commission  on  any  sales  made 
in  your  territory  during  your  absence. 

12.  Upon  receipt  by  me  from  The  National  Cash 
Register  Company  of  notification  of  the  settlement  of  an 
account  by  cash  or  notes,  you  are  to  be  credited  on  my 
books  with  the  amount  of  your  commission  on  such  settle- 
ment. 

13.  In  case  the  purchaser  fails  to  pay  any  note,  and 
your  commission  on  the  sale  has  been  paid  or  credited  to 
you,  the  commission  on  the  amount  of  the  unpaid  note 
is  to  be  charged  back  against  your  account. 


17  1      iM{(>iiij:.Ms  IX  saij:s  .ma.\a(;ioment 

11.  All  ordcis  tor  cmsIi  icfiistcrs  shall  l)o  takini  on 
priiilcd  forms  funiislird  inr  li\'  said  Coinpaiiy,  which  are 
to  he  ichiiiicd  to  MIC  iiiiincdialcly  after  the  sifi;nature  by 
the  puicliaseis,  and  all  conditions  and  special  agreements 
shall  !»<•  noted  thereon,  it  licinn  understood  and  ajj;reed 
that  said  ('ompany  shall  in  no  way  be  responsible  for 
promises  or  conditions  not  specified  on  the  orders.  No 
registers  or  suppli(>s  are  to  be  sold  for  more  or  less  than 
the  list  price  established  by  the  Company,  plus  freight  or 
express.  If  said  Company  is  oblig(Ml  to  make  any  con- 
cessions to  customeis,  or  any  exi)ense  is  incurred  by  a 
violation  of  these  recpiirements,  the  amount  thereof  may 
be   chaiged   by   me   to  your  account. 

15.  You  are  to  collect  jiromptly  and  tuin  ov^cr  to 
the  Collection  Department  of  this  office,  at  once,  all  notes 
or  accounts  which  may  be  placed  in  your  hands  for  collec- 
tion, whether  the  sale  was  made  by  you  or  not. 

IG.  You  agree  to  make  daily  remittances  to  me  of 
all  cash  r(H'(nv(Hl  for  me  or  The  National  Cash  Register 
Company,  including  money  received  for  supplies  sold  and 
repairs  made,  in  the  manner  prescribed  by  me,  and  in  no 
event  shall  you  use  any  sum  of  money  collected  for  me 
or  said  Company  to  defray  your  expenses  or  for  any  other 
purpose.  In  no  case  and  under  no  circumstances  shall 
you  sign  my  name  or  said  Compan5''s  name;  but,  should 
a  purchaser  require  a  receipt  for  a  cash  or  other  payment, 
you  will  receipt  to  him  in  j'our  own  name  as  salesman. 

17.  I  reserve  the  right  to  retain  from  the  commission 
now   due   or  hereafter  to   become   due   you  the   sum    of 

dollars  ($ ), 

to  be  held  as  a  deposit  and  security  for  good  faith  on  your 
part,  and  to  protect  me  against  loss  by  reason  of  com- 
missions charged  back  against  your  account.  In  case 
of  any  termination  of  3'our  employment,  the  sum  so  with- 
held shall  remain  in  my  hands  until  all  registers,  upon 
the  sale  of  which  you  have  been  credited  commissions, 
are  paid  for  in  full. 

18.  All  attorney's  fees  and  costs  arising  upon  collec- 
tion of  the  prices  of  registers  sold  by  you  or  recovering 
possession  of  same  charged  to  my  accoimt  l)y  said  Com- 
pany shall  be  divided  between  us,  and  you  are  to  have 
charged  to  j^our  account  by  me  and  pay  the  same  propor- 
tion tiiercof  as  you  receive  or  would  receive  of  the  full 
commission  upon  such  sale.  In  case  a  cash  register  is 
shijiped  to  a  purchaser  on  an  order  procured  by  you  and 
the  purchaser  makes  no  payment  on  same,  you  are  to  pay 
your  proportional  part   of  the  express  or  freight  charges 


MANAGEMENT  OF  SALES  FORCE  475 

on  the  register,  on  the  basis  as  above  stated.  You  are  to 
pay  your  own  expenses  in  attending  on  tri^^ls  of  cases 
whether  you  are  responsible  for  same  or  not,  if  I  so  elect. 

19.  You  are  to  pa^^  all  your  expenses,  and  under  no 
circumstances  are  you  to  represent  The  National  Cash 
Register  Company  or  me  as  being  responsible  for  same. 

20.  In  case  of  the  termination  of  this  contract  for 
any  cause,  j'^ou  hereby  authorize  me  to  pay  and  charge 
to  your  account  your  outstanding  indebtedness,  incurred 
in  the  management  of  said  territory,  but  I  shall  not  be 
called  on  to  pay  said  indebtedness  unless  1  shall  elect  to 
do  so,  and  the  pajmient  of  part  of  your  indebtedness  by 
me  shall  not  raise  any  obligation  on  my  part  to  pay  the 
whole  of  said  indebtedness.  No  assignment  of  your 
account  or  any  part  of  it,  at  any  time  to  be  binding  upon 
me  unless  such  assignment  is  accepted  and  acknowledged 
in  writing  by  me. 

21.  In  case  this  contract  shall  be  terminated  at  any 
time  I  shall  proceed  to  collect  the  notes  and  open  accounts 
and  charge  back  against  your  account  the  commission 
upon  such  notes  and  accounts  as  I  shall  be  unable  to 
collect,  together  with  your  proportional  part  of  the  ex- 
penses of  collection.  This  to  continue  until  a  final  account 
can  be  stated,  and  no  money  shall  be  due  you  under  this 
contract  until  such  a  final  account  can  be  stated. 

22.  It  is  mutually  agreed  that  all  objections  to 
monthly  or  other  statements  of  account  rendered  by  me 
are  waived  by  you,  unless  written  notice  thereof  reaches 
me  within  thirty  days  after  rendition. 

23.  You  agree,  while  operating  your  territory  outside 
of  your  headquarters  town,  to  carry  with  you  on  the  road 
the  full  line  of  regular  samples  required  b}"  the  Company's 
decisions. 

24.  You  agree  that  you  will  not  purchase  or  deal 
in  second-hand  registers  on  your  own  account  during  the 
continuance  of  this  contract. 

25.  You  agrec^  to  furnish  said  Company  and  me  with 
a  fidelity  bond  in  the  sum  of  One  Thousand  Dollars 
(Si, 000. 00)  to  be  issued  by  a  responsible  suret}^  company 
and  conditioned  on  the  faithful  performance  of  your  duties 
and  to  indemnify  said  Company  and  me  from  loss  by 
reason  of  any  wrongful  act  or  acts  on  your  part  in  the 
position  created  by  this  contract.  All  premiums  on  this 
bond  to  be  paid  by  you. 

26.  In  the  case  this  contract  shall  be  terminated 
at  any  time,  you  agree  to  immediately  give  or  deliver 


17C.         IMioHIJlMS  IN  SAI.i:s  MAXA(  llOMKNT 

to  ino  or  lo  someone  I  may  (lesip;nate,  possession  of  the 
premises  you  may  occupy  as  an  office  at  that  time,  and, 
if  I  so  re(iiicst,  lo  assign  t"  iiic  or  to  such  person  as  I  may 
(lesi<z;nale,  any  lease  you  may  lia\'c  on  such  premises; 
and  on  (hMiiand  you  a{j;ree  lo  rctuiii  the  office  furniture, 
jiersonal  propeily,  nn-ords,  and  fixtures  henMnbefore 
refencd  to.  to  me  to  he  hy  me  crecHted  to  your  account 
at  my  election,  i-(><far(lless  of  the  condition  of  your  account. 
The  price  at  which  such  ofhce  furniture,  pei'sonal  property, 
records,  and  fixtures  shall  he  credited  or  purchased,  shall 
he  the  I'easonahle  value  thei'eof,  but  in  no  case  shall  it 
exceed  90  per  cent  of  tli(>  last  appraised  value.  Under  no 
circumstances  are  \-ou  to  dispose  of  the  office  furniture, 
fixtures,  or  other  personal  piopcrl\-  without  first  securing; 
my  consent  to  said  sale. 

27.  For  any  breakage  oi-  damage  done  to  my  property 
or  the  property  of  The  National  (^ash  Il"gister  Company, 
while  in  .your  charge,  you  are  to  l)e  held  responsible,  and 
all  losses  sustaine<l  by  such  breakage  or  damage  shall  be 
paid  by  3'()u. 

28.  You  agree  to  keep  a  list  of  probable  purchasers, 
and  also  a  list  of  users  of  National  Cash  Registers  in  your 
territory.  Both  lists  to  show  the  name,  business,  and 
address  of  the  merchant,  and  the  users'  list  to  show  also 
the  stjde  and  factory  mnnber  of  each  register  in  use.  You 
agree  to  keep  both  of  these  lists  up  to  date  by  revising 
and  adding  to  same  from  information  to  be  secured  by 
your  daily  work  in  your  territory.  These  lists  shall  be 
and  remain  the  property  of  The  National  Cash  Register 
Company  and  shall  be  delivered  by  you  at  any  time  to  an 
authorized  representative  of  said  Company  on  demand  or 
at  the  termination  of  your  contract. 

29.  You  agree  to  send  to  me,  at  the  end  of  each  day, 
a  list  of  all  persons  who  were  called  on  during  the  day  by 
you  in  the  interests  of  the  business;  said  list  to  show  each 
person's  name,  street  address,  city,  and  business,  and 
a  brief  statement  of  the  object  and  result  of  said  call;  all 
to  be  written  on  the  form  furnished  by  me. 

30.  It  is  understood  and  agreed  that  this  contract  is 
a  personal  one  between  us,  and  that  The  National  Cash 
Register  Company  is  not  to  be  held  responsible  for  the 
payment  of  any  commissions  or  charges  falling  due  under 
it,  and  all  claims  of  liability  of  any  kind  against  said  Com- 
pany under  this  contract  are  hereby  waived. 

31.  Your  continuance  in  such  agency  to  end  at  the 
option  of  either  party  by  written  notice  mailed  to  the  last 
known  address  of  tlu^  other. 


MANAGEMENT  OF  SALES  FORCE  477 

32.  This  contract  covers  all  agreements  to  date  between 
us,  and  all  other  contracts  or  agreements  of  any  kind  are 
hereby  annullcMl  and  cancelled. 

33.  No  alterations  of  or  additions  to  the  provisions  of 
this  contract  are.  to  be  binding  upon  us  unless  in  writing 
signed  by  both  of  us. 

(Sales  Agent) 
Accepted 19 ...  . 

(Salesman) 

Questions 

1.  Does  this  protect  the  company  against  the  fol- 
lowing contingencies : 

(a)  Suit  for  damages  in  case  of  discharge  of  sales- 
man for  not  securing  sufficient  business. 

(b)  Suit  for  damages  for  discharge  of  salesman  in 
case  he  violates  policies  of  the  company. 

(c)  Suit  for  damages  for  discharge  because  of 
automatic  continuance  of  contract. 

(d)  Suit  for  commissions  upon  orders  secured  but 
not  shipped. 

(e)  Suit  for  damages  through  discontinuance  of 
product  and  issuance  of  instructions  to  sales  force 
to  stop  taking  orders  for  that  product. 

2.  What  changes  should  be  made  in  the  contract  to 
make  it  suitable  for  salesmen  operating  on  a  salary 
basis? 


478        PROBLEMS  I\  SALES  MANAGEMENT 

1 'km  HI, KM    '■273 

(  Omi'Knsation  of  Salesmen* 

A  coiu'cni.  wliicli  liad  a  s;il(>s  orjuani/atioii  consisting; 
of  u  sales  inanaj^cr,  assistant  sales  nianasor,  advertising 
manafrer.  and  18  salesmen,  was  not  functioning  satis- 
factorily. Analysis  showed  that,  out  of  the  18  sales- 
men, only  0  were  what  might  be  termed  successful  from 
a  profit  basis,  the  other  12  being  only  mediocre. 

A  new  sales  manager  was  secured  and  confronted 
with  the  problem  of  bringing  the  force  up  to  a  profitable 
basis.  He  found  that  there  were  several  ways  of 
attacking  the  situation:  by  the  use  of  the  forced  draft 
method,  common  in  selling  cme-time  specialties;  by 
bolstering  up  the  men  with  direct  advertising;  or  it  was 
even  possible  to  employ  pace-setters,  who  would  go 
out  into  a  man's  territory  and  show  him  up.  There 
were  objections  to  all  these  plans.  The  first  plan  would 
not  work  out  in  this  case,  where  men  had  to  build  for  the 
future  as  well  as  get  the  immediate  order.  The  second 
plan  was  costly  for  the  close  margin  of  profit  in  the 
product.  The  third  plan  was  attended  with  the 
possibility  of  discouraging  the  force,  fostering  jealousy, 
and  breaking  down  team-work. 

Salaries  of  the  men  were  based,  in  a  general  way, 
upon  the  value  of  the  salesman  to  the  business.  One 
salesman  might  have  an  easy  territory  and  with  equal 
effort  get  more  salary  than  another  salesman  making 
poor  territory.  So  far  as  the  men  could  see,  salary 
increases  were  largely  a  matter  of  how  well  they  were 
regarded  by  the  chief  officers.  The  new  sales  mana- 
ger belie\es  that,  if  some  sort  of  jirofit-sharing  scheme 
could  be  worked  -out  to  make  the  men  recei\'e  the 
profit  due  them  from  every  transaction,  the  old-time 
vigor  of  the  organization  would  be  restored  and  suc- 
cess would  be  assured. 

Question 
What  should  be  done? 

*Sales  Management,  January,  1920;  also  1919,  p.  121. 


r 


MANAGEMENT  OF  SALES  FORCE  479 

Problem  274 
Method  of  Compensation 

The  Bragdon  Adding  Machine  Company,  with  main 
sales  offices  in  New  York,  has  placed  sales  in  charge  of  a 
general  sales  manager  under  whom  is  an  assistant  sales 
manager  in  charge  of  domestic  sales,  an  export  sales 
manager,  and  an  advertising  and  promotion  manager. 
Under  the  domestic  sales  manager  are  district  sales 
managers  who  have  control  of  salesmen  and  local 
managers.  Local  managers  are  assigned  definite  terri- 
tories in  a  district.  The  salesmen  are  of  three  types — 
senior  salesmen,  junior  salesmen,  and  advance  agents 
who  are  the  new  recruits  to  the  sales  force  and  whose 
dut}^  is  simply  that  of  arranging  demonstrations  for 
either  the  junior  or  senior  salesmen  with  whom  they 
work.  The  junior  salesmen  are  those  who  have 
been  promoted  from  the  position  of  advance  agents 
after  serving  three  months  in  that  capacity,  and 
after  a  training  course  of  from  four  to  six  weeks  in  the 
factory  school  of  the  company.  The  junior  salesman 
works  under  the  direction  of  a  senior  salesman  or  local 
manager  in  giving  demonstrations  and  in  instructing 
purchases  in  the  operation  of  the  machine.  Little  by 
little  the  junior  is  allowed  to  advance  in  his  selling  work 
until  he  can  carry  through  a  demonstration  and  close 
the  sale.  After  three  months  or  more  of  gradually 
increased  responsibility,  if  successful,  he  is  made  a 
senior  salesman. 

Up  to  July  1921,  the  compensation  of  the  sales  force  was 
paid  almost  entirely  by  commission.  Advance  agents 
were  paid  a  straight  salary  of  $20  or  $25  a  week.  This 
salary  was  borne  one-third  by  the  company,  one-third 
by  the  district  manager,  and  one-third  by  the  salesman 
with  whom  he  worked.  A  junior  salesman  was  paid  in 
like  manner,  though  his  salary  was  greater.  When  a 
junior  salesman  was  promoted  to  the  position  of  senior 
salesman  he  went  on  a  straight  commission.  Likewise, 
the  local  and  district  managers  were  paid  on  commis- 
sion. The  district  manager  received  a  commission  of 
35%  on  all  sales  in  his  district,  out  of  which  came  the 


48U        TKUliLKMS  IN  SALl^S  MANAGEMENT 

conimissions  of  the  local  iikuimp;(M"  and  sonior  salesmen. 
The  local  nianaj^er  was  |)ai(l  a  30%  commission  upon 
all  sales  made  from  his  ollice.  From  this  he  paid  the 
commission  of  salesmen  uiuler  liim.  The  senior  sales- 
m(Mi  working  in  cities  where  no  expenses  were  to  be 
incurred  except  carfare  got  20%  within  12  miles  of 
the  local  ofhce.  Outside  the  r2-mile  limit  25%  was 
allowetl  on  sales  to  cover  additional  expenses.  Each 
senior  salesman  hoic  all  his  own  expenses.  The  local 
manaf2;er  had  t(j  i)ay  oflice  expenses  from  his  commis- 
sion, while  the  district  manager  bore  his  personal 
expenses  and  the  expenses  of  the  district  office.  As 
noted,  the  salaries  of  advance  agents  and  junior  sales- 
men were  borne  in  part  b}'  the  salesmen  and  managers. 
When  business  conditions  were  good  the  plan  was 
found  satisfactor}'  insofar  as  satisfaction  on  the  part 
of  salesmen,  local  managers,  and  district  managers  w'as 
concerned.  With  the  general  business  depression  of 
1920-21,  however,  expenses  accumulated  while  sales 
steadil}^  decreased.  The  management  felt  the  necessity 
of  changing  its  method  of  compensation. 

Question 
What   system   of  compensation  should   have  been 
adopted? 


Problem  275 
District  Sales  Directors 

W^ith  the  development  of  the  sales  organizations, 
there  is  a  constant  tendency  to  cut  dow-n  the  territories 
assigned  to  salesmen.  Frequently  the  smaller  terri- 
tories yield  more  business  than  the  larger  did.  For 
much  the  same  reasons,  some  concerns  advocate  fewer 
salesmen  for  the  sales  manager  to  look  after.    Without 


MANAGEMENT  OF  SALES  FORCE 


481 


cutting  down  the  sales  force,  this  implies  that  there 
shall  be  more  sales  managers  or  sales  supervisors  under 
the  general  sales  manager's  direction  than  there  are 
now  in  most  organizations.  After  giving  the  matter 
considerable  thought  and  study,  the  Sherwin,  Williams 
Company  is  of  the  opinion  that  there  should  be  a  sales 
manager  for  every  ten  salesmen.  The  head  of  a 
prominent  real  estate  organization  has  five  supervising 
general  sales  managers  under  the  president,  five  sales 
managers  to  each  general  sales  manager,  and  ten 
salesmen  to  the  sales  manager.  A  large  implement 
manufacturer  sets  eighteen  salesmen  as  the  ideal  mark. 
The  Simpson  Drug  Company  is  a  manufacturing 
wholesale-drug  corporation  with  large  plants  located  in 
New  York  City  and  St.  Louis.  It  has  an  extensive  line 
of  private  brands,  which  are  widely  advertised;  its 
goods  are  sold  direct  to  drug  retailers  throughout  the 
United  States,  the  plan  of  exclusive  representation 
having  been  adopted  and  successfully  carried  out. 
The  general  organization  of  the  sales  department  is 
shown  by  the  following  diagram. 


GENERAL  SALES  MANAGER 

M 

|l 

1 

1 

1 

Manager 
of    Salesmen 

Sales  Promotion 
Manager 

Manager  of 
Sales  Records 

Manager  of 
Agency  Promotion 

! 

1 

1 

District  Sales 
Directors 

Department  Sales 
Managers  (18) 

Pacific  Branch 
Manager 

1 

1 

Salesmen  (90) 

Pacific  Salesmen 

It  will  be  noticed  that  the  salesmen  report  to  the 
manager  of  salesmen,  who  is  responsible  only  to  the 
general  sales  manager.  The  general  sales  manager  and 
the  manager  of  salesmen  feel  very  strongly,  on  the 
basis  of  much  experience,  that  it  is  impossible  for  one 
or  two  men  to  handle  successfully  90  salesmen. 
Consequently,  it  has  been  decided  to  try  out  the  plan 


482        IM{()HL1:MS  in  SALE8  MANAGEMENT 

of  (Jislrict  sjili's  directors  to  be  appointed  i'roiii  the  ranks 
of  the  salesmen.  The  duties  of  the  sales  director  are 
stated  in  a  letter  from  the  ^-enei'al  sales  (h^paiiment  to 
salesmen,  a>-;  follows: 

(,1)  It  has  hccii  decided  that  in  \aiious  parts  of  the 
country  we  will  put  in  char{»;e  of  certain  territories  an 
expericnc(Hl  n>presentative,  wiio  will  he  known  as  a  Sales 
Director. 

(2)  The  Sales  DiiiH'tor  will  he  in  charge  of  sales  in  his 
district  and  answeiahle  only  to  the  Sales  Manager  and  will 
be  lu>ld  strictly  rcsijoiisihlc  l)y  him  foi'  I'csults  in  the  terri- 
tory. 

(3)  Mr.  ,1.  .1.  Eraser,  nnlil  further  notice,  will  repre- 
sent at  the  ll()ni(>  ()ffic(>  th(>  Sales  Directors  and  will  act 
as  a  go-b(^tween  in  the  dealings  that  the  Sales  Directors 
have  with  the  various  (U^partniental  managers  and  will 
be  held  resj)onsible  for  results  in  his  woi'k  by  the  Sales 
Manager. 

(4)  The  Sales  Director  will  lia\-e  full  charge  of  arrang- 
ing and  assigning  of  territoiv  to  I'epresentatives  in  his 
district. 

(5)  He  is  to  hire  new  luvu  for  his  district  and  they  can 
be  sent  into  fioston  for  training,  subject  to  the  O.  K.  of 
the  Sales  Manager,  and  he  can  dismiss  any  man  working 
under  him,  but  he  is  expected  to  get  the  O.  K.  of  the  Sales 
Manager   before   doing   this. 

(6)  He  is  expected  to  report  at  the  Home  Office  any 
unsatisfactory  work  that  is  being  done  in  his  district  by 
the  representatives. 

(7)  He  is  expected  to  work  with  his  various  men  in 
their  respective  territories  spending  as  much  time  with 
them  as  he  deems  advisable,  and  when  with  them,  show 
how  best  to  get  results  by  wni'king  the  more  difficult 
accounts. 

(8)  He  is  also  expected,  wIkmi  he  considers  it  advisable, 
to  go  out  and  work  individual  accounts  personally. 

(9)  He  should  call  the  men  under  him  together  at 
least  every  60  to  90  days,  if  advisal)le,  and  systematically 
work  out  a  campaign  for  their  next  trip  over  their  terri- 
tory, suggesting  seasonable  items  to  work  on  and  planning 
the  proper  featuring  of  future  merchandise. 

(10)  He  is  expected  to  take  up  promptly  all  matters 
affecting  dealers  or  representatives  with  the  proper  author- 
ities at  the  Home  Office  and  is  also  expected  to  give  prompt 
attention  to  all  correspondence. 


MANAGEMENT  OF  SALES  FORCE  483 

(11)  All  matters  affcctino-  tho  Sales  Department, 
cither  through  poor  service  or  faulty  manufacture  of  mer- 
chandise, should  be  taken  up  promptly. 

(12)  He  is  expected  to  send  in  successful  selling  ideas 
used  by  his  men  or  by  our  dealers  in  his  district  and  is  to 
work  out  different  selling  ideas  with  a  view  not  only  of 
selling  merchandise,  but  also  with  the  thought  of  helping 
our  dealers  dispose  of  the  merchandise  sold  them. 

(13)  It  is  expected  that  he  scmd  in  a  weekly  report, 
showing  in  detail  the  work  that  he  does  and  covering  the 
general  conditions  in  the  territory  which  he  has  been 
working. 

(14)  He  should  receive  from  each  representative  in 
his  district  the  weeklj^  expense  account,  copy  of  route 
sheet  and  report  of  calls  made,  checking  same  as  promptly 
as  possible  and  sending  to  Home  Office  the  checked  expense 
accounts  and  reports  of  calls  made. 

(15)  Sales  Directors  should  see  to  it  that  the  repre- 
sentatives in  their  districts  send  them  all  initial  orders  for 
their  approval  and  thej'  should  then  forward  same  to  proper 
destination. 

(1(3)  All  applications  for  new  agencies  or  successions 
should  receive  the  0.  K.  of  the  Sales  Director  and  be  acted 
upon  by  him  as  soon  as  possible. 

(17)  All  merchandise  sold  by  the  Sales  Director  shall 
go  to  the  credit  of  the  representative  in  whose  territory 
the  order  is  taken. 

(18)  All  business  letters  sent  to  Sales  Directors  should 
be  0.  K.'d  b}^  Mr.  Fraser,  or  in  his  absence  by  Mr.  Bryant, 
and  copies  of  same  sent  to  Mr.  Fraser  for  reference.  Mr. 
Fraser  should  also  be  furnished  with  copies  of  all  letters 
sent  to  representatives  working  under  Sales  Directors,  and 
he  will  be  held  responsible  for  the  seeing  to  it  that  the  last- 
mentioned  copies  are  forwarded  to  the  proper  Sales  Direc- 
tor, In  the  case  of  all  lettei's  written  to  our  dealers  in 
territory  that  comes  under  a  District  Manager,  and  where 
copies  are  sent  to  the  representative  working  that  territory, 
an  extra  copy  should  be  sent  to  Mr.  Fraser,  who  in  turn 
will  forward  same  to  the  Sales  Director. 

Of  the  six  sales  directors  so  far  appointed,  two  have 
been  placed  in  charge  of  five  salesmen  each,  one  in 
charge  of  six,  one  in  charge  of  seven,  and  two  in  charge 
of  eight.  One  of  the  problems  connected  with  the 
adoption  of  this  plan  is  that  of  retaining  the  esprit  de 
corps  among  salesmen  in  a  district,  where  one  of  their 


484        PROBLEMS  IN  SALES  MANAGEMENT 

number  has  been  appointed  sales  director  and  has  been 
given  authority  over  them. 

Questions 

1.  As  general  sales  manager,  write  a  letter  which 
would  satisfaetoril}'  explain  the  reasons  for  the  move 
and  secure  the  cooperation  of  salesmen  with  the  new' 
sales  director  and  the  sales  organization  generally. 

2.  Should  these  sales  directors  be  rotated  from  one 
district  to  another? 

3.  Criticise  the  general  plan  of  ha\'ing  sales 
directors. 


In  one  of  the  districts  in  which  there  have  been  five 
salesmen,  the  district  sales  director  recommends  that 
two  salesmen's  territories  be  divided  and  that  two  new 
salesmen  be  added.  The  salesmen,  who  work  those 
territories  at  present,  object  to  having  their  territories 
cut  down. 

Question 

How  should  the  matter  be  handled? 


Problem  276 
Organization  for  Field  Supervision  of  Salesmen 

The  sales  manager  of  the  Ames  Company,  a  Chicago 
dry-goods  jobber  handling  dress  goods,  ready-to-wear, 
notions,  knit  underwear  and  hosiery,  has  become 
dissatisfied  with  the  showing  of  his  salesmen,  particu- 
larly in  hosiery  and  underwear  sales.  It  seems  that  the 
salesmen,  who  are  provided  with  samples  and  equip- 


MANAGEMENT  OF  SALES  FORCE  485 

ment  for  handling  all  the  lines  of  the  company,  prefer 
to  sell  dress  goods  and  other  lines  which  run  into  money 
more  rapidly  than  the  specialty  or  notion  lines. 

As  an  experiment,  the  sales  manager  hired  a  specialty 
salesman,  gave  him  the  samples  and  equipment  for  the 
sale  of  underwear  only,  and  set  him  to  work  in  the 
Pennsylvania  and  Ohio  territory  where  the  showing  of 
the  general  salesman  was  particularly  bad  in  hosiery 
and  underwear  sales.  To  the  surprise  of  the  sales 
manager,  the  sales  of  the  specialty  salesman  were 
larger  than  the  total  general  sales  of  the  general  sales- 
man in  that  territory.  The  general  salesman  had  all 
along  been  opposed  to  the  experiment;  when  he  saw 
the  results,  he  claimed  that  he  was  being  cheated  and 
stated  that  he  would  quit  unless  paid  commission  upon 
all  specialty  sales. 

The  sales  manager  feels  that  one  of  two  courses  of 
action  is  open:  either  an  adjustment  of  compensation 
so  that  commission  is  paid  to  both  the  general  salesman 
and  the  specialty  salesman  (this  would  have  a  tendency 
to  increase  selling  costs) ;  or  giving  the  specialty  sales- 
man much  of  the  territory  with  carte  blanche  to  hire 
an  assistant  or  assistants  to  work  the  general  trade  (this 
is  the  course  which  the  sales  manager  is  inclined  to 
adopt). 

Questions 

1.  Which  plan  is  preferable? 

2.  What  is  to  be  said  for  the  second  plan? 


486       PH()H1.1<:MS  IX  SALl'lS  .m.\xa(;kmknt 

Problem  '277 

Management  of  Salesmen 

The  sales  iiiamials  of  rertain  firms  contain  (he  fol- 
lowing^ clause  or  its  ecjuivalent: 

No  order  is  to  be  accepted  oi'  entered  unless  signed 
by  an  autlioi'ized  jxtsoii  of  the  company  or  firm 
ordering,  or  acc<)nii)anied  by  a  ref2;ular  official  con- 
firmation. When  an  order  is  submitted  by  a 
salesman  imsigned  by  the  company  or  firm 
ordering;,  it  must  be  acc()m])anied  b}'  an  explana- 
tion from  the  salesman  fixing  reasons  why  not 
signed,  together  with  time,  date,  and  place  order 
was  given  to  salesman;  and  when  received  at  the 
factory,  before  being  entered  it  must  be  approved 
by  the  general  sales  manager. 

Questions 

1.  What  are  the  purposes  of  such  provisions? 

2.  Is  it  generally  wise  to  issue  such  orders? 


Problem  278 
Rating  Employees* 

In  a  large  New  York  bank  it  was  found  that  some 
systematic  record  of  employees'  attainments  and 
performances  must  be  kept  as  a  means  of  enlisting  the 
good  will  of  em])loyees. 

Each  employee,  upon  entering  into  the  service  of 
the  concern,  is  made  acquainted  with  the  purpose  and 
administration  methods  of  the  companj^  and  with  the 
cards.  He  is  also  shown  the  qualities  in  which  he  is  to 
be  rated  and  what  the  rating  scheme  is. 

Among  the  chief  qualities  for  which  ratings  are  given 
are  the  following: 

*Cf.    Problems   39,   40. 


MANAGEMENT  OF  SALES  FORCE  487 

Accuracy  and  appearance  of  work 

Amount  accomplished 

Attendance  and  punctuality 

Intelligence 

Interest  in  work 

Personal  appearance 

Quickness  to  learn 

Speed  and  quantity  of  work 

Tact 

Trustworthiness 

General  value  to  the  bank 

Ratings  are  made  every  three  months.  Employees 
are  given  access  to  their  own  rating  cards  in  some  cases; 
in  others,  they  are  called  in  to  interview  the  personnel 
officer  as  to  where  they  stand. 

Questions 

1.  Can  this  be  applied  to  salesmen  and  branch 
managers? 

2.  Prepare  a  form  in  which  proper  weight  is  given 
to  various  qualities  to  be  rated. 

3.  Would  you  suggest  any  other  qualities  than  those 
mentioned? 


Problem  279 
Salesmen  and  Credit  Department 

In  the  sale  of  automobile  trucks  the  work  of  the 
credit  department  is  especially  important.  Many  men 
in  the  trucking  business  or  those  just  starting  in  the 
business  have  but  little  capital.  They  count  on  making 
as  large  an  initial  payment  as  possible  on  a  truck  with 
the  idea  of  settling  for  the  remainder  in  monthly 
instalments  out  of  their  earnings.  Often  the  first 
payment  is  only  for  one-third  or  one  quarter  the  price 
of  the  car.     The  credit  department  must  determine 


4SS      im{()Hij-;ms  ix  sal1':s  manackment 

whether  the  prospeetive  l)usincss  of  the  man  will  be 
sufliciciit  to  eiuil)lc  him  to  meet  the  periodic  payments, 
ill  June  1!)21,  the  sales  manager  of  the  Dartmouth 
Sales  ("ompany,  a  selling;  corporation  for  Dartmouth 
trucks,  l(>arn(Ml  that  three  of  the  company's  best 
salesmen  located  in  three  different  selling  branches  had, 
from  time  to  time,  without  the  knowledge  of  the  man- 
agement, loaned  small  truckmen  enough  money  to  make 
the  initial  payments  on  the  cars,  so  that  the  credit 
department  of  the  Dartmouth  Company  would  accept 
the  sales.  The  salesmen  took  the  unsecured  notes  of 
these  customers  for  their  loans,  for  the  reason  that 
the  company  held  mortgages  on  the  trucks. 

Question 
What   should   have   been   the   action   of  the   sales 
manager  when  he  learned  of  this  practice  by  these 
salesmen? 


Problem  280 
Inducing  Salesmen  to  Sell  High-Profit  Goods 

In  the  manufacture  of  biscuits  there  is  close  connec- 
tion between  raw-material  prices  and  the  prices  of  the 
finished  product.  In  the  Cartwright  Company  the 
purchasing  department  watches  the  market  very 
closely  and  is  quick  to  take  up  any  bargains  offered. 
For  example,  the  company  may  have  an  opportunity 
to  purchase  cocoanut  under  very  favorable  terms. 
Such  a  purchase  is  made  and  the  sales  force  is  then 
called  upon  to  dispose  of  the  product  made  of  that 
material.  This  results  either  in  giving  greater  profits 
to  the  compan}^  or  allowing  them  to  give  a  special 
stimulating  price  upon  a  particular  line,  by  means  of 


MANAGEMENT  OF  SALES  FORCE  489 

what  they  call  the  "push"  system.  The  main  office  and 
representatives  of  the  purchasing,  production  and  sales 
departments  get  together  weekly  and  determine  what 
kinds  of  crackers  shall  be  pushed  under  the  existing 
market  conditions  to  show  the  best  profit  to  the 
conlpan3^  After  this  is  determined,  the  salesmen  are 
notified  that  the  following  week  certain  kinds  of 
crackers  will  be  push  kinds.  Salesmen  are  then 
expected  to  exert  special  efforts  on  these  high-profit 
goods.  WTiile  the  salesmen  do  not  receive  any  monetary 
rewards  for  exerting  themselves  on  these  items,  the 
results  show  up  on  the  reports  and  it  is  to  their  advan- 
tage to  cooperate  with  the  management.  All  salesmen 
are  paid  on  a  salary-and-commission  basis  for  95%  of 
their  income,  while  the  other  5%  comes  to  them  in  the 
way  of  bonuses. 

Questions 

1.  Criticise  this  as  a  possible  means  of  coordinating 
sales  and  production. 

2.  Under  w^hat  conditions  is  the  inducement  here 
offered  salesmen  to  exert  special  efforts  to  sell  desig- 
nated products  sufficient? 


Problem  281 
Control  of  Salesmen 

The  Malaney  Macaroni  and  Cracker  Company, 
located  in  Omaha,  Nebraska,  handles  a  line  of  biscuits 
and  crackers  and  several  types  of  package  macaroni 
and  similar  goods.  The  company  follows  the  custom 
of  most  of  its  competitors  in  giving  a  large  cash  dis- 
count, namely  10%,  for  payment  within  10  days,  but 
ordinarily  the  discount  is  allowed  if  payment  is  made 


VM)        l>K()liLi:MS  IN  SAL]':S  MANACaOMENT 


wlion  the  traveling;  salosnion  visit  dealers  on  the  next 
trij)  after  orders  ha\e  been  delivered.  Calls  are  made 
upon  customers  every  three  weeks.  It  is  customary 
for  the  company  to  assign  ([uotas  for  biscuits  and  to 
establish  from  time  to  time  certain  deals  or  special 
offers,  including  goods  which  the  firm  desires  to  have 
salesmen  push.  The  following  shows  the  records  of  the 
salesmen  as  to  percentage  of  quota  attained  during  the 
year  to  date  (to  July  1),  number  of  new  accounts 
secured  by  each  salesman  during  June,  the  number  of 
cases  of  macaroni  sold  during  June,  the  amounts  of 
June  sales  outstanding  and  still  uncollected  by  salesman 
on  July  1,  finally  the  sales  by  salesmen  of  two  special 
deals : 


Percentage  of  Quota  At 

Lee 95% 

Stock  well 110 

Cobb 56 

Kincaid 84 

Trott 95 

Frye 125 

Hering 90 

Seymour 95 

Littlefield 115 

Newport 82 

Snow 90 

Patten 81 

Englen 40 

Johnson 90 


TAiXED  During  Year  to  Date 

Wallace 70% 

Dempsey 82 

Porter 95 

Walcott 89 

Hathaway 70 

Crowlev 89 

Eldridge 12 

Beeman 95 

Goller 102 

Guest 45 

Hare 75 

Ham 80 

Wood 78 

Mean 45 

Winton 65 


New  Accounts  Obtained  During  June 


Porter 15 

Englen 14 

Trott 11 

Seymour ....  10 

Lee 9 

Johnson 8 

Winton 8 

Cobb 7 


Goller 7 

Stockwell ....  6 

Snow 5 

Pray 4 

Crowley 4 

Frve 4 

Patten 3 

Wood 3 


Dempsey ....  3 

Newport ....  2 

Littlefield...  .  2 

Beeman 2 

Wendell 1 

Hathaway. .  .  1 

Hering 1 

Wallace 1 


Number  Cases  Macaroni  Sold  During  June 

Lee 261  Crowley. ...  199  Patten  ....  162 

Hering 234  Ham 174  Stockwell. .  147 

Mean 215  Cobb 165  Johnson.  ..  133^ 


MANAGEMENT  OF  SALES  FORCE 


491 


Dempse} 
Porter.  . . 
Frye . . . 
Kincaid 
Wallace 
Hare.  . . 
Walcott 


122 
107 
103 
100 

93i 

87 

86 


Percentage 

Lee 26% 

Stockwell...57 

Cobb 63 

Kincaid ....  64| 

Trott 66* 

Frye 83 

Hering 86| 

Seymour .  .  .  88| 
Littlefield...88| 
Newport ...  89^ 


Littlefield. . .   69 

Snow 64 

Wood 59 

Newport ....  54 

Wendell 52 

Goller 46 

OF  June  Sales  Unc 
Snow 90|% 


Beeman 43 

Englen 33 

Winton 23 

Hathaway ...  22 

Trott 13 

Norbert 13 

Guest 10 


Patten .  . 
Englen.  . 
Johnson. 
Wallace . 
Dempsey 
Porter. .  . 
Walcott. 


.91i 

.9U 

.941 

.961 

.97 

.97f 

.98* 


Hathawayl05 


ollected 
Crowley 
Eldridge 
Beeman 
Goller.. 
Guest. 
Hare. . 
Ham. . 
Wood. 
Mean. 
Winton 


106% 

108 

IIU 

112 

113 

113 

122i 

141 

141 

174 


Number  Special  Deal  No.  1  Sold 


Johnson 50 

Hering 45 

Hare 37 

Ham 35 

Littlefield...  .34 

Manley 34 

Frye 28 

Kincaid 24 


Goller 21 

Wood 17 

Mean 16 

Walcott 14 

Winton 13 

Stockwell....ll 

Porter 11 

Dempsey. ...  10 


Newport 9 

Wendell 5 

Hathaway. .  .  .5 

Beeman 5 

Englen 4 

Trott .3 

Patten 1 

Snow 1 


Number  Special  Deal  No.  2  Sold 


Johnson  (dark 

horse) ....  128 
Littlefield. .  .  105 

Frye 86 

Wood 65 

Mean 53 

Newport.  .  .    30 
Ham 20 


Goller 20 

Walcott 18 

Wendell 15 

Kincaid 11 

Winton 8 

Patten 6 

Dempsey. ...    6 


Stockwell 5 

Norbert 4 

Wallace 3 

Beeman 2 

Manley 2 

Snow 1 

Crowley 1 


Question 
On  the  basis  of  these  records,  what  conclusions,  if 
any,  may  be  drawn  as  to  the  relative  value  of  the 
salesmen  to  the  house? 


!!)•_'        lM;()IiM:MS  T\  SAl.i:s  MAXACKMKNT 

M  ANACKMKNT    OI"    SaLKS.M  K.N 

The  Liiiicrick  Shoo  Conipany  solliiifi;  a  liijih-pirade 
shoe  has  a  doincslic  sales  foree  of  fourteen  men.  They 
are  j)ai(l  an  annual  salary  and  expenses.  In  the  past, 
when  these  men  were  not  needed  on  the  road,  they 
have  as  a  rule  been  jdlowed  to  remain  idle.  Sometimes 
in  the  off  seasons  a  few  have  been  employed  in  the 
develojiment  of  new  lasts.  The  same  condition  exists 
at  the  present  time,  althoujj;h  the  tendency  in  the  shoe 
industry  is  to  increase  the  length  of  the  selling  season. 
Shoe  manufacturers  are  largely  at  the  mercy  of  trade 
customs  in  the  matter  of  length  of  selling  season, 
though  certain  measures  can  be  taken  to  eliminate 
partially  seasonal  peaks.  In  the  past  it  has  been  the 
custom  to  send  salesmen  on  the  road  for  spring  season 
about  September  15.  Sales  conventions  are  usually 
held  just  before  the  sales  trips;  for  this  reason,  it  is  a 
decided  advantage  to  have  salesmen  get  in  and  out  at 
the  same  time.  It  affords  the  best  chance  for  raising 
the  esprit  de  corps  of  the  force.  The  company  wishes 
to  keep  the  lines  uniform.  It  is  desirable  to  make  up 
the  samples  carried  by  salesmen  as  late  as  possible. 
Thus,  in  determining  the  line  to  be  carried,  the  com- 
pany has  an  advantage  if  its  salesmen  start  even  later 
than  September  15.  In  the  past  year  or  two,  it  has 
been  found  possible  and  profitable  to  send  salesmen 
out  the  latter  part  of  July  on  a  trip  lasting  until 
October  1  to  make  sales  which  were  lost  on  the  earlier 
trip.  The  plan  has  been  to  have  the  force  come  into 
the  Boston  office  about  the  first  of  October  for  a 
convention  and  to  start  the  men  on  a  spring  sales  trip 
October  10. 

It  has  de\'eloped  that  business  conditions  in  the 
southern  territories  are  so  bad  that  it  will  not  pay 
to  make  the  "in-between"  trips  there.  Unless  sales- 
men are  on  the  road  by  September  15,  orders  cannot  be 
filled  in  time  for  southern  dealers  for  the  spring  trade. 
If  the  southern  salesmen  are  sent  out  early,  they  miss 


MANAGEMENT  OF  SALES  FORCE  493 

the  convention.  Also,  by  sending  them  out  early  the 
company  is  forced  to  lose  the  advantage  of  determining 
the  line  as  late  as  it  would  otherwise. 

Question 
What  should  be  done  under  the  circumstances? 


Probleai  283 
Management  of  Salesmen — Trial  Orders 

The  branch  manager  for  a  mechanical  equipment 
house,  which  does  business  in  all  parts  of  the  country, 
in  examining  the  daily  reports  of  his  salesmen,  found 
the  general  tenor  of  remarks  was  as  indicated  by  the 
following  extracts: 

Purchasinp;  agent  has  ample  supply  of  small  tools  at 
the  present  time,  but  agreed  to  buy  a  small  quantity  of 
ours  and  make  comparisons. 

I  could  see  that  Mr.  White  was  greatly  impressed  by 
my  talk  upon  belting,  and  he  is  going  to  use  ours  on  one 
battery  of  machine  tools  to  see  how  it  stands  up. 

These  people  certainly  gave  me  a  nice  hearing.  I  feel 
that  they  are  trying  to  be  entirely  fair.  They  finally  gave 
me  an  order  for  one  package,  which  they  will  watch  very 
closely  for  results. 

This  account  is  a  hard  nut  to  crack,  but  I  made  up  my 
mind  not  to  give  up  and  today  I  kept  my  foot  on  the  door 
until  I  got  a  tryout  order,  which  I  am  confident  will  lead  to 
more  business. 

I  made  a  long  and  careful  canvass  for  their  mechanical 
supply  business,  but  of  course  I  could  hardly  expect  a  big 
order  from  them  the  first  time. 

Question 
What  conclusions,  if  any,  are  to  be  drawn  from  these 
reports? 


I'.tl        I'UoliLEMS  IN  SALES  MANAGEMENT 

I'liOlil.l'.M    ^.'Sl 

Sii)i:-Lim:s  ('akhikd  my  Salesmen 

A  (■(iiiipMiiy  iii;iiiiil';icl  iiriiij^  u  lit  iiiji,  inks  and  adhesives 
pays  its  sal(>s  t'orcc  almost  cntii'cly  on  the  JKisis  of  salary 
and  actual  oxponsos,  cx])oc'tini2;  therefor  to  secure  the 
exclusive  services  of  the  salesmen.  Recently,  the  sales 
manaficr  learned  that  one  of  his  salesmen  sold  a 
customer  an  order  of  aUied  but  non-competitive  goods. 
Inciuiries  were  made  of  the  salesman  and  he  replied 
that  he  did  it  as  a  service  to  another  salesman,  who 
was  taken  sick  in  the  town  whei-e  the  sale  was  made 
before  visiting  all  th(>  trade  in  that  town. 

Questions 

1.  What  should  the  sales  manager  do? 

2.  Under  what  conditions,  if  any,  is  it  advisable  for 
a  sales  manager  to  permit  the  salesmen  to  carry  side- 
lines? 


Problem  285 
Intensive  Use  of  Sales  Force 

A  manufacturer  of  men's  shirts,  whose  salesmen 
called  upon  dealers  every  sixty  da^'s,  as  is  customary 
in  the  trade,  decided  to  double  the  number  of  calls. 
Territories  were  cut  in  half,  and  the  sales  force  was 
doubled.  For  a  period  of  six  months,  sales  records 
show  that  the  increase  is  no  greater  than  normal. 

Question 
What  reasons  might  be  assigned  foi-  such  a  result? 


MANAGEMENT  OF  SALES  FORCE  495 

Problem  286 
Drawing  Accounts 

The  Wright  BiUing  Machine  Company  has  its  offices 
in  Detroit,  Michigan.  Its  organization  is  similar  to 
that  of  manj'  companies  seUing  office  apphances. 
Under  a  sales  manager  are  district  managers  in  charge 
of  local  managers  and  salesmen.  The  local  managers 
supervise  the  work  of  senior  and  junior  salesmen, 
subject  to  the  direction  of  the  district  managers.  The 
senior  salesmen  are  on  a  straight  commission  basis  of 
payment,  receiving  20%  on  sales  in  territory  within  a 
12-mile  radius  of  city  branches  and  25%  in  territory 
outside.  Senior  salesmen  pay  all  of  their  own  expenses, 
but  are  given  a  drawing  account  by  the  main  office. 

In  June  1921,  and  previous  thereto,  it  was  the 
practice  of  the  company  upon  promoting  a  junior 
salesman  to  the  position  of  senior  salesman,  to  grant 
him  a  drawing  account  up  to  $50  a  week  which  was 
allowed  until  he  was  able  to  carry  himself  by  his 
commissions.  The  drawing  account  was  charged 
gradually  against  the  commissions  due  him. 

During  the  dull  period  of  business  from  July  1920, 
to  July  1921,  the  Wright  Company  continued  to  extend 
its  sales  organization  in  the  face  of  the  depression,  with 
the  result  that  its  business  was  well  maintained  in 
comparison  with  that  of  other  manufacturers  selling 
similar  products,  but  the  sales  of  individual  salesmen 
were  far  below  those  of  the  preceding  years.  Further, 
the  new  salesmen  were  especially  weak  in  getting 
business  during  this  period.  Some  salesmen,  as  a 
result  of  unusually  adverse  conditions,  overdrew  their 
accounts  to  such  an  extent  that  it  would  have  taken 
them  from  one  or  two  years  to  wipe  out  their  debit 
balances,  even  with  a  return  to  normal  conditions. 
The  indications  were  that  these  men,  with  an  increase 
in  experience,  would  be  desirable  salesmen.  Some  of 
the  overdrawn  accounts  were  those  of  local  managers 
in  charge  of  local  offices.  These  men  were  allowed  a 
commission  larger  than  that  of  senior  salesmen  not  in 
charge  of  offices,  but  from  it  they  had  to  pay  office 


496        I'KOHLKMS  IN  SALES  MANAGEMENT 

expenses.  Some  of  lliese  local  inaiKip;ers  hud  senior 
salesmen  workinj:;  under  them,  ii|)()n  whose  sales  they 
realiz(ul  a  5^'(,  commission. 

At  a  connnittee  meeting  ol  ihe  sales  managers  in  the 
main  office  in  July  1921,  consideration  was  giv'en  as  to 
how  to  treat  thes(>  overdrawn  accounts. 

Quesiioths 

1.  Should  the  company  have  taken  a  loss  outright 
by  wiping  off  the  debit  balances  standing  against  sales- 
men and  local  managers? 

2.  Should  they  have  adopted  a  policy  of  making  the 
salesmen  pay  off  the  amount  owed,  gradually,  or  should 
they  have  adopted  an  intermediary  course  of  reducing 
the  amount  due? 


Problem  287 
Daily  Reports  of  Salesmen 

The  Fowder  Company,  seUing  a  food  product,  requires 
of  its  salesmen  daily  sales  reports  in  which  are  given 
salesman's  name,  date,  time  of  first  call,  time  of  last 
call,  amount  collected.  The  towns  made  are  then  listed 
with  the  number  of  calls  in  each  town,  number  sold  in 
each  town,  and  new  accounts.  Expenses  are  also  given, 
itemized  as  railroad  fares,  meals  and  lodging,  telephone 
and  telegraph,  bus  and  street-car  fares,  team  and 
driving,  sundries,  gas  and  oil.  On  the  reverse  of  the 
report  are  spaces  for  statement  of  sales  made  according 
to  varieties  with  a  special  statement  for  "push"  kinds 
sold,  or  brands  which  the  sales  department  has  asked 
salesmen  to  push  during  the  week. 

A  drug  company  asks  for  a  much  simpler  report 
giving   date,    name   of   customer,    town,    state,    place 


MANAGEMENT  OF  SALES  FORCE  497 

where  order  was  sent  (since  company  sells  through 
branches),  initial  order  or  prospect,  whether  or  not  sale 
was  made  and  if  not,  why?  One  copy  is  sent  to  the 
headquarters  and  the  other  to  the  branch  office. 

Questions 

1.  Under  what  conditions  are  these  reports  sufficient 
for  satisfactory  control  of  salesmen? 

2.  When  are  they  unsatisfactory? 


Problem  288 
Supervision  of  Salesmen's  Expense  Accounts 

The  Stanley  Wise  Hardware  Company  of  St.  Louis 
is  engaged  in  the  wholesale  hardware  business  and  sells 
its  product  throughout  the  Mississippi  Valley.  In  the 
management  of  salesmen  a  good  deal  of  trouble  has 
developed  because  expense  accounts  of  salesmen  seem 
to  have  been  such  as  to  perceptibly  increase  selling  cost. 
The  supervision  of  salesmen's  expense  accounts  has 
been  extremely  lax  and  nothing  definite  has  been  done 
except  to  provide  small  books  for  memoranda. 

The  sales  manager  of  the  concern  has  made  an 
inquiry  among  other  sales  managers  in  regard  to  sales- 
men's expense  accounts  and  learns  that  there  is  a 
considerable  difference  of  opinion  both  in  the  methods 
of  supervision  and  in  the  theories  upon  which  super- 
vision is  based. 

One  sales  manager  declares  it  unwise  to  require  a 
closely  itemized  return.  It  is  contended  that,  if  sales- 
men cannot  be  trusted,  their  connection  with  the  com- 
pany should  be  severed.  A  report  which  gives  railway 
expenses,  hotel  expenses,  and  miscellaneous  is  sufficient, 
and  even  this  should  be  required  only  about  once  a 
month.     It  is  further  stated  that  to  be  petty  annoys  a 


■198        I'KohLl'.MS  L\  SALKS  AIANAC^EMENT 

j!;()()(l  salcsiiKin  juid  impairs  his  value  more  than  could 
|)ossil)ly  1)0  f:;ain('(l  by  <l(>tailod  supervision. 

The  ()pj)()si(e  ojjinioii  is  expressed  by  another,  who 
claims  that  (^xpense  accounts  should  be  ^iven  in  detail 
and  that  the  list  of  expenses  which  will  be  allowed  by 
the  company  should  be  clearly  understood  before  the 
salesman  jijoes  out  on  his  ti'ij). 

A  third  sales  manager  declaics  that,  if  the  report  form 
is  so  orp;anized  as  to  require  salesmen  to  place  expenses 
and  sales  side  by  side  and  to  require  them  to  figure 
out  the  percentage  of  expense  to  business,  a  moral 
check  is  set  which  is  more  valuable  and  much  less 
annoying  than  close  supervision. 

Still  another  sales  manager  checks  u])  his  reports  by 
figuring  for  each  salesman  the  actual  number  of  days 
tra\oled  and  computing  the  averages  for  hotel  expense, 
railroad  expenses,  etc.  On  the  basis  of  previous  expe- 
rience, by  this  method  a  discrepancy  can  be  quickly 
detected  through  variation  from  the  general  average. 

It  was  the  opinion  of  the  former  sales  manager  of 
the  Stanley  Wise  Hardware  Company  that  expense 
accounts  should  be  very  carefully  supervised,  that  they 
should  be  paid  immediately  in  order  to  avoid  hardship, 
then  checked  carefully. 

Question 
What  plan  should  be  adopted? 


MANAGEMENT  OF  SALES  FORCE  499 

Problem  289 

Use  of  x\utomobiles  by  Salesmen  and  Branch 

Managers 

In  view  of  the  increases  in  railroad  rates,  many  firms 
are  considering  the  use  of  automobiles  for  their  sales- 
men in  making  calls.  A  soap  company  having  national 
distribution  with  about  100  salesmen,  in  investigating 
the  matter,  finds  that  there  are  two  general  methods 
used  in  supplying  cars  to  salesmen.  One  is  for  the 
company  to  purchase  the  cars  outright,  retaining 
property  in  them,  but  giving  the  use  of  them  to  the 
salesmen.  In  this  case  the  company  pays  all  expenses 
of  upkeep  and  running,  as  they  would  in  any  other  form 
of  transportation. 

The  other  plan  is  for  the  company  to  buy  the  cars 
and  resell  them  to  the  salesmen  on  a  time-payment 
basis.  The  expense  chargeable  to  the  house  is  met  by 
a  fixed  weekl}^  or  monthly  allowance.  One  company 
requires  an  initial  payment  of  approximately  25%  of 
the  purchase  price,  the  balance  to  be  paid  in  weekly 
instalments  of  sufficient  amounts  to  take  up  the  entire 
balance  within  one  year  from  date  of  purchase.  In 
case  a  salesman  resigns  before  completing  payments, 
he  either  pa^^s  the  balance  due  the  company -or  arranges 
to  sell  the  car  to  the  best  advantage;  and,  if  the  amount 
received  exceeds  the  amount  due  the  companj^,  the 
salesman  is  given  the  balance. 

Another  company  purchases  the  cars  and  resells 
them  to  the  salesmen  on  an  instalment  basis,  and  each 
salesman  is  allowed  $500  operating  expenses.  The 
salesman  pays  this  amount,  and  it  is  credited  to  him  on 
the  payment  of  his  car. 

Still  another  company  buys  and  resells  the  cars  on 
$20  a  month  instalments,  which  are  deducted  from  a 
monthly  expense  allowance  of  $50. 

When  companies  own  machines,  the  usual  practice  is 
to  have  each  salesman  give  a  daily  or  weekly  report  of 
expenses,  in  the  same  manner  he  would  in  riding  on  the 
train,  and  the  company  pays  all  expenses.  Armour 
&  Company  and  the  Barrett  Company  use  this  plan. 


.•.()()        PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  What  arc  th(>  advantages  of  each  plan? 

2.  \\  liicli  would  1)6  advisable  for  adoption  by  the 
soap  conipaiiy  (l(>scribed  in  Problem  No.  30? 

3.  Would  it  be  necessary  to  revise  salesmen's 
territories  given  in  Pi-obleni  No.  97  if  automobiles  were 
adopted? 

4.  Would  it  be  wise  to  allow  salesmen  to  route 
themselves? 

5.  Should  a  monthly,  weekly,  daily  or  mileage 
allowance  be  adoi)ted? 

6.  Should  branch  managers  be  treated  differently 
from  salesmen  in  regard  to  automobile  expenses? 


Problem  200 
Control  of  Salesmen's  Automobile  Expense 

Business  concerns  which  undertake  to  pay  the 
expenses  of  salesmen  have  not  infrequently  encountered 
difficulty  in  satisfactorily  controlling  expenses,  when 
some  or  all  of  the  salesmen  are  using  automobiles  for 
calling  upon  the  trade.  A  company  selling  a  widely 
advertised  safety  razor  provides  Franklin  cars  for  a 
number  of  its  salesmen,  who  make  the  outlying  districts. 
It  requires  of  the  users  a  weekly  report,  gi^'ing  the  daily 
cash  expense  and  the  amounts  charged  for  the  following 
items:  garage  rent,  gasoline,  oil,  washing  car,  repairs, 
new  parts,  accessories.  The  company  furnishes  all  the 
tires  and  inner  tubes,  which  are  purchased  in  quantities. 
On  the  rejiort  is  also  required  the  meter-reading 
Monday  morning,  the  meter-reading  Sunday  evening, 
mileage  for  the  week  and  for  each  day,  total  miles  cov- 
ered, personal  mileage,  gallons  of  gasoline  purchased, 


MANAGEMENT  OF  SALES  FORCE  501 

and  names  of  towns  not  visited  last  year  by  company's 
representative.     At  the  bottom  of  the  form  is  the 

statement:  "Please  charge  me  with  miles  at  5 

cents  per  mile  used  in  personal  service"  with  space  for 
salesman's  signature.  On  the  •  reverse  of  the  form 
are  instructions  for  filling  out  automobile  expense 
accounts,  as  follows:  . 

(1)  Reports  should  be  filled  out  in  duplicate,  one  copy 
to  be  mailed  to  Cleveland  at  the  close  of  each  week  and  one 
copy  kept  with  the  salesman,  so  that  he  can  answer  any 
inquiries  direct  from  copy  of  report. 

(2)  It  is  important  that  each  item  be  entered  in  its 
proper  place  in  the  report. 

(3)  Receipts  should  be  secured  for  all  expenditures  of 
$1  or  over  and  attached  as  vouchers  to  this  report. 

(4)  In  order  to  know  the  exact  company  cost  of 
operating  the  car,  personal  mileage  (if  there  should  be  any) 
should  be  stated  with  the  greatest  degree  of  accuracy. 

(5)  We  ask  you  to  make  your  report  complete  and 
accurate  to  save  correspondence. 

A  second  company,  likewise  with  a  national  dis- 
tribution, encourages  the  use  of  Ford  cars.  After 
considerable  experience  w^th  various  methods  of 
control,  the  following  plan  has  been  adopted.  The 
companj^  sells  each  salesman  a  machine  or  allows  him 
to  buy  his  own  machine,  advancing  not  over  $800  to  be 
paid  back  within  at  least  15  months.  If  the  man  is  on 
a  commisvsion  basis  of  payment,  he  pays  all  his  own 
expenses.  If  he  is  a  salaried  man,  the  company  allows 
10  cents  a  mile  for  running  his  car.  The  mileage 
allowed  is  checked  on  the  map  on  the  salesman's  terri- 
tory for  the  shortest  running  distance  between  points. 
Eight  hundred  miles  a  month  are  allowed  each  sales- 
man for  the  distance  traveled  within  town  limits.  The 
management  leaves  it  to  the  salesman  to  state  the 
mileage  used  within  a  city's  limits.  On  an  average, 
between  150  and  200  miles  a  week  are  reported. 

Question 
Which  of  the  two  plans  would  be  suitable  for  the 
company  described  in  Problem  No.  239? 


502        I'HoliLKMS  L\  SALKS  xMANAGEMENT 

Pkohlem  291 
Sales  Conventions 

The  Mitchell  Typewriter  Company  has  its  main  sales 
offices  in  New  York  City.  It  has,  throughout  the 
United  States,  ai)j)Voxiinately  100  branch  offices 
and  a  force  of  '200  senior  salesmen,  besides  a  large 
numbei'  of  junior  salesmen.  The  policy  of  the 
Mitchell  Company  has  been  to  liold  an  annual  sales 
convention  in  New  York,  to  which  all  senior  salesmen 
have  been  brought  with  all  expenses  paid.  Such 
conventions  have  been  thought  well  worth  while 
because  of  their  inspirational  \alue  and  because  of 
the  educational  work  which  has  been  carried  out  at 
such  meetings.  In  1921,  the  sales  of  the  company 
had  fallen  off  materially.  The  finances  of  tlie  com- 
pany were  in  good  condition,  but  economy  was  being 
practiced  throughout  the  organization. 

At  a  connnittee  meeting  of  the  general  sales  manager 
and  his  assistants  in  July  1921,  the  matter  of  holding 
a  national  convention  in  the  fall  was  discussed.  There 
was  a  division  of  opinion  as  to  what  course  should  be 
pursued.  Some  favored  elimination  of  the  national 
convention  that  year  because  of  the  great  expense 
entailed;  others  maintained  that  the  national  conven- 
tion would  be  of  especial  value  at  that  time  as  an  aid 
to  bolstering  up  sales.  It  was  suggested  that  division 
conferences  should  be  substituted  for  the  national 
convention.  The  officers  had  had  no  experience  with 
district  conferences,  but  knew  that  manufacturers  of 
other  products  had  used  them  with  apparent  success. 

Questions 

1.  Should  the  Alitchell  Company  have  omitted  its 
national  convention  when  sales  were  not  good? 

2.  Should  the  company  have  permanently  sub- 
stituted district  conventions  for  national  conventions? 


MANAGEMENT  OF  SALES  FORCE  503 

Problem  292 

Sales  Contests 

Many  sales  managers  believe  that  contests  among 
salesmen  are  necessary  from  time  to  time  in  order  to 
develop  a  healthy  interest  and  rivalry.  Other  sales 
managers  have  had  disastrous  experience  with  sales 
contests,  because  they  develop  jealousy  instead  of 
healthy  rivalry  and  the  subsequent  performance  of  the 
sales  force  as  a  whole  is  less  satisfactory  than  before  the 
contest  was  staged.  If  it  is  decided  to  put  on  a  contest, 
the  sales  manager  has  to  take  care  that  he  avoids  the 
pitfalls  into  which  many  apparently  well-planned  selling 
plans  of  this  kind  have  fallen. 

The  sales  manager  of  the  Warden  Company  of  Troy, 
New  York,  a  firm  manufacturing  a  line  of  men's  collars 
and  shirts  which  are  widely  advertised,  wished  to  stage 
a  contest  among  his  salesmen  during  1921,  It  was 
suggested  that  money  prizes  be  offered  on  the  basis  of 
greatest  accomplishment  for  the  firm;  this  was  to  be 
judged  by  the  volume  of  sales,  number  of  new  agencies 
established,  cooperation  with  advertising  department 
in  distribution  of  dealer  helps,  general  value  to  the 
business  as  rated  by  a  committee  of  sales  executives. 
Two  prizes  wxre  to  be  given  in  each  territory  and  one 
larger  prize  to  be  given  to  the  leading  man  in  all 
districts. 

Question 

What  must  the  sales  manager  do  in  order  to  work  out 
this  plan  satisfactorily? 


PART  VII 
CONTROL  OF  SALES  OPERATIONS 


PART  VII 

CONTROL  OF  SALES  OPERATIONS 
OUTLINE 

A.     Necessity  of  Control. 

1.  Requisites  of  satisfactory  control  systems. 

P>,     Methods  of  Control. 

1.  Reports  and  records. 

2.  Control  officials. 

3.  Graphic  methods  of  sales  control. 

C.  Reports. 

1.  Reports  of  salesmen,  agents,  representatives. 

2.  Reports  of  field  and  district  offices. 

3.  Reports  of  sales  executives. 

4.  Reports  of  outside  agencies. 

D.  General  Records. 

1.  Statistical    records    I'elating    to    customers,    pros- 

pective customers,  and  sales  variously  classified 
according  to  products,  territories,  classes  of 
buyers,  etc. 

2.  Records  relating  to  performance  of  salesmen  and 

other  members  of  sales  force  according  to  indi- 
viduals, districts,  etc. 

3.  Records  bearing  upon   advertising;    control  and 

results. 

4.  Records  of  orders,  deliveries,  and  shipments. 

5.  Recoi'ds  or  personnel. 

(a)  Ratings,      application      blanks,     interview 

blanks,  etc. 

(b)  Individual  performance  data. 

(c)  General  data. 

E.  Methods  of  Handling  Sales  Records. 

507 


508        PKOliLEMS  IN  SALES  MANAGEMENT 

GENERAL  QLESTIONS* 

A.  Necessity  of  Control. 

What  arc  tho  rcciuisitcs  of  a  satisfactory  system  of  con- 
trol of  sales  operations?  Is  there  necessity  for  a  system  of 
control  outside  of  tlint  furiiishod  by  accountinp;  systems? 

B.  Methods  of  Control. 

W'liat  reports  and  records  can  be  used  for  the  control 
of  sales?  Should  the  control  of  sales  operations  be  the 
function  of  any  siii<!;]e  official  or  not?  In  what  way  can 
jrraphic  methods  be  us(>d  in  sales  control?  What  should 
be  the  nature  of  reports  of  salesmen,  agents,  and  repre- 
sentatives? What  reports  should  the  sales  executive  pre- 
pare for  administrative  officers?  What  type  of  reports 
should  be  secured  from  agencies  outside  the  business? 
What  are  the  sources  of  the  following  records  and  why 
should  they  be  used  in  controlling  sales:  (a)  records 
relating  to  customers;  (b)  records  of  prospects;  (c)  sales 
classified  according  to  products,  territories,  classes  of 
buj'ers,  et  cetera;  (d)  records  relating  to  the  performance 
of  salesmen  and  other  members  of  the  sales  force,  giving 
sales  according  to  individuals,  districts,  lines,  et  cetera; 
(e)  records  dealing  with  advertising,  showing  returns 
from  advertising,  expenditures,  et  cetera;  (f)  records  of 
orders,  deliveries,  and  shipments;  (g)  statements  of 
budget  estimates  as  to  sales,  production,  stocks,  et 
cetera;  (h)  records  of  personnel,  such  as  application 
blanks,  interview  blanks,  letters,  ratings,  individual  per- 
formance data? 

C.  Selling  Costs. 

What  items  should  properly  enter  into  selling  cost? 
How  can  standards  for  various  items  of  selling  cost  be 
determined? 

*Among  the  few  sources  of  information  upon  sales  control  may  be 
mentioned  two  Dartnell  Reports:  A  Special  Report  on  the  Use  of 
Graphic  Charts  in  Sales  Department  Work,  and  Suggestive  Sales  Record 
and  Order  Systems  as  Used  by  Representative  Concerns  in  Varied  Lines 
of  Business;  M.  T.  Copcland,  Business  Statistics,  Harvard  University 
Press;  Brinton,  Graphic  Methods  of  Presentitig  Facts,  pu]:)lished  by  the 
Engineering  Magazine.  Budgetary  control  is  discussed  in  a  series  of 
articles  in  Administration,  January,  1921,  and  succeeding  months;  J.  O. 
McKinscy,  Budget  Making  and  Control,  Ronald  Press;  W.  E.  Freeland, 
Coordination  of  Sales  with  Scientific  Production,  Bulletin  of  the  Taylor 
Society,  October,  1920;  L.  Greendlinger,  Financial  and  Business  State- 
ments, Alexander  Hamilton  Institute;  Proceedings  of  the  Taylor  Society, 
Spring   Meeting,    1921;  Cottingham,  Description  of  Budget  System  of 


CONTROL  OF  SALES  OPERATIONS  509 

Problem  293 

Sales  Records 

It  has  been  stated  that  business  men  feel  they  should 
have  information  under  the  following  headings  in  order 
properly  to  control  a  business  :* 

L  Running  inventory  of  stock;  by  selling  price;  by 
quantities;  purchases;  "used"  or  sold;  balance  on 
hand  by  departments  or  lines;  by  percent  of  sales. 

2.  Sales  (total;  by  departments;  by  lines;  by  sales- 
men; by  territories;  by  percentage;  by  discounts 
taken). 

3.  Profits  or  losses  (by  departments;  by  lines;  sales- 
men; percent;  discount  taken). 

4.  Costs  of  doing  business  (total;  departments; 
kinds  of  expense;  amount;  percent  sales  or  cost). 

5.  Collections  (total;  percent  of  sales;  territories). 

6.  Outstanding  obligations  (total;  percent  of  sales; 
territories ;  overdue) . 

7.  Goods  returned  (total;  lines;  territories;  percent 
of  sales). 

8.  Balance  sheet. 

9.  Financial  summary  (statement  of  operations). 
10.  Trade  and  business   conditions    (crops;  money 
market;    inventions;    development    of    new    trade 
customs;  styles;  transportation;  weather). 

IL  Efficiency  of  employees  (by  profits;  percentages 
on  standards  of  work  or  conduct;  and  complaints). 

12.  Advertising  (total;  departments;  media;  results). 

13.  Cash  (receipts;  disbursements;  anticipated  pay- 
ments). 

Sherwin-Williams  Paint  Company,  System,  May,  1920;  Journal  of 
Accountancy,  June,  1920,  Accounting  Measures  to  Meet  Depression; 
Journal  of  Political  Economy,  November,  1919,  Accounting  as  an  Admin- 
istrative Aid;  the  following  articles  in  Printers'  Ink:  July  28,  1921,  A 
Monthly  Photograph  of  Supply  and  Demand;  January  20,  1916,  Graphic 
Sales  Pictures  that  Analyze  the  Business.  The  student  is  also  advised 
to  consult  general  works  upon  business  organization  mentioned  on 
page  29  foot-note. 

*J.  H.  McCullough,  System,  May,  1918. 


:>l()       TKOJiLKMS  IX  SALKS  MANAGEMENT 

14,  Hate  of  turnover  (on  total  business;  by  depart- 
ments; lines;  nunilx'r  of  day  sales  on  ledfj^er). 

15.  Production  (by  amount  finished,  under  way 
and  not  started;  time  lost;  by  total  cost;  by  unit 
cost;  by  labor  cost — direct  and  overhead;  by  material 
cost;  by  "overhead"). 

Questions 

1.  How  much  of  this  information    is   properly   col- 
lected by  the  sales  department? 

2.  How  nmch  is  of  interest  to  the  sales  department? 

3.  What  items  are  essential   to  proper  conduct  of 
sales  activities? 


Problem  294 

Sales  Expense 

A  sales  executive,  as  well  as  other  executives  inter- 
ested in  the  general  aspects  of  an  enterprise,  is  inter- 
ested in  keeping  selling  costs  at  the  lowest  point 
consistent  with  the  desired  volume  of  business  and  net 
profits.  In  order  to  ascertain  when  and  why  selling 
cost  is  satisfactory  or  unsatisfactory,  some  method  of 
comparison  is  necessary,  but  comparison  is  difficult 
because  of  the  various  items  which  are  included  by 
some  concerns  in  selling  costs  and  not  included  by 
others.     Among  these  items  are  the  following: 

Accounting  department  Canvassing 

Adjustments  Charity 

Advertising  Collections 

Association  dues  Coupons 

Auditing  departmont  Cost  and  inventory 

Bad  debts  Credit  department:  salaries, 

Billing  department  expenses 

Branches:  salaries,  commis-  Dead  stock 

sions,  bonuses,  expenses  Dealers'  commissions 


CONTROL  OF  SALES  OPERATIONS 


511 


Demonstrating 

Designing  previous  to  sale 

Developing  department 

Discounts,  sales 

Education  work:  sales 
schools,  etc. 

Entire  overhead 

Exhibits 

Expense  operation  automo- 
biles and  depreciation 

Export  commissions 

Export  freight 

Foreign  selling 

Free  goods 

Freight  and  cartage 

Insurance 

Janitor 

Legal  expense 

Losses  on  restaurant 

Mail-order  department 

Marine  insurance 

Mercantile  reports 

Office  rent 

Order  department 

Paymaster 

Postage 

Questions 

1.  Which  of  these  are  properly  chargeable  to  sales 
expense? 

2.  Which  are  common  to  all  sales  departments? 

3.  To  what  extent  does  the  nature  of  the  business 
afTect  the  inclusion  or  exclusion  of  the  various  items  in 
selling  expense? 


Profit-sharing 

Proportion  of  overhead 

Royalty 

Rental 

Sales  conventions  or  con- 
ferences 

Sales  department:  salaries, 
expenses)  bonuses 

Sales  manual 

Salesmen's  liability  and  in- 
surance 

Salesmen's  salaries,  commis- 
sions, bonuses,  expenses 

Service  and  refinishing 

Special  advertising  for  local 
dealer 

Stationery  and  supplies 

Stenographic  department 

Submission  expense 

Tabulating  department 

Telephone  and  telegraph  de- 
partment (selling) 

Trade  aid 

Traffic  department 

Welfare  department 


nl'i        I'UOHI.KMS  I\  SAL1-:S  MANAGEMENT 

1*h<ihm:m  !295 
'roi.M,  Ski,li.\(;  Expense 

The  Miixwcll  ("oiiipany  luis  operated  a  wholesale 
grocery  business  in  Maxwell,  Ohio,  since  1909.  In  1920 
the  companj'  employed  30  salesmen,  and  its  net 
sales  amounted  to  $2,735,021.38.  Mr.  Arthur  Stubbs 
joined  the  company  in  1910.  He  was  promoted  to 
sales  manager  on  January  1,  1915,  and  has  held  that 
position  for  the  past  five  and  a  half  years. 

During  July,  1921,  Mr.  Stubbs  received  a  bulletin 
issued  by  the  Harvard  Bureau  of  Business  Research, 
Harvard  University,  that  gave  the  results  of  a  study  of 
operating  expenses  in  the  wholesale  grocery  business  in 
1920.  Upon  examining  this  bulletin  Mr.  Stubbs  found 
the  following  tables: 

TABLE  I 

Operating  Expenses  in  the  Wholesale  Grocery  Business  in 
1920  by  Federal  Reserv(>  Districts.     Net  Sales—  100% 


I  S       r^-g.       |;         I         J         .S         -         £=      £^      := 


Z     (!.•§    o       as      <      o       ^     S  §■  tfc     Q     ccfe 


"3   O. 


Number  of  Firms 19       23       14  30       27       21       58       33  23  35  11        24 

Total  Sales  Force 1.8%  2.1%  1.8%  1.7%  2.0%  1.9%,  1.9%  2.5%  2.4%  2.5%  2.1%  1.9% 

Advertising 0.05  0.05  0.06  0.04  0.03  0.03  0.04  0.05  0.06  0.08  0.03  0.05 

Other  Selling 0.05  0.06  .0.01  0.03  0.04  0.05  0.05  0.06  0.09  0.04  0.04  0.07 

Total  Selling 1.9  2.2  1.9  1.8  2.1  2.0  2.0  2.6  2.6  2.7  2.2  2.0 

Wages  of  Kecciving  and 

Shipping  Force 1.4  1.1  1.5  1.2  I.O  1.0  1.0  1.0  1.0  1.1  1.1  1.1 

Packing  Cases  and  Wrap- 
pings  0.05  O.Oy  0.03  0.05  0.05  0.02  0.05  0.06  0.06  0.03  0.01  0.03 

Outward  Freight,  Express 

and  Cartage 0.9  0.3  0.5  0.4  0.3  0.4  0.4  0.3  0.2  0.4  0.4  0.5 

Total  Receiving  and 

Shipping 2.4  1.5  2.0  1.7  1.4  1.5  1.6  1.4  1.3  1.6  1.5  1.6 

Executive    Salaries    (In- 
cluding Buying) 1.0  1.0  l.I  0.8  0.8  1.1  0.9  0.9  0.9  0.8  0.9  0.7 

Office  Salaries 0.6  0.7  0.8  0.7  0.8  0.8  0.8  0.9  0.8  0.8  0.8  0.8 

Office  Supplies  and  Post- 
age  0.2  0.2  0.1  0.2  0.1  0.2  0.2  0.2  0.2  0.2  0.2  0.2 

Telephone  &  Telegraph.   0.04  0.03  0.04  0.03  0.04  0.04  0.04  0.05  0.05  0.04  0.04  0.08 
Credit  and  Collection...  0.02  0.03  0.03  0.02  0.06  0.05  0.05  0.04  O.Oi  0.03  0.04  0.03 
Other  Buying  &  Manage- 
ment  0.08  0.1  0.06  0.03  0.1  0.1  0.1  0.2  0.3  0.1  0.2  0.2 

Total  ditto 2.0  2.1  2.2  1.8  1.9  2.3  2.1  2.3  2.3  2.0  2.2  2.0 

Rent 0.4  0.4  0.5  0.3  0.3  0.4  0.3  0.3  0.4  0.2  0.5  0.4 

Heat,  Light  and  Power..  0.06  0.07  0.06  0.05  0.04  0.04  0.06  0.04  0.07  0.05  0.04  0.03 
Taxes  (except   on   build- 
ings,    income,     and 

profits) 0.3  0.1  0.1  0.2  0.3  0.3  0.2  0.3  0.4  0.4  0.3  0.4 

Insurance     (except     on 

buildings) 0.2  0.1  0.2  0.2  0.2  0.2  0.2  0.2  0.1  0.2  0.2  0.1 

Repairs  of  Equipment... 0.07  0.02  0.11  0.04  0.05  0.08  0.06  0.07  0.07  0.05  0.02  0.03 
Depreciation    of    Equip- 
ment  0.1  0.2  0.3  0.2  0.2  0.1  0.1  0.2  0.1  0.2  0.3  0.1 

Totallntcrest 1.5  1.5  1.5  1.4  1.6  1.6  1.5  1.5  2.3  1.9  2.2  1.6 

Total   Fixed   Charges  & 

Upkeep 2.6  2.4  2.8  2.4  2.7  2.7  2.4  2.6  3.5  3.0  3.6  2.7 

Miscellaneous 0.2  0.1  0.6  0.2  0.3  0.4  0.2  0.2  0.3  0.2  0.4  0.2 

Loss>es  from  Bad  Debts.  .0.2  0.1  0.2  0.1  0.2  0.3  0.1  0.4  0.3  0.2  0.7  0.2 

Total  Expense 9.3  8.4  9.7  8.0  8.6  9.2  8.4  9.5    10.3  9.7    10.6  8.7 


CONTROL  OF  SALES  OPERATIONS  513 

After  reading  the  bulletin,  Mr.  Stubbs  requested 
their  head  bookkeeper  to  draw  up  for  him  their  total 
selling  expense  for  the  year  1920.  He  instructed  the 
bookkeeper  to  include  only  those  items  shown  on  the 
standard  profit  and  loss  statement  used  by  the  Bureau 
in  making  its  study. 

The  bookkeeper  submitted  the  following  table  to  Mr. 
Stubbs,  stating  that  in  accordance  with  the  Bureau's 
method  the  percentages  shown  were  based  on  net  sales 
as  100%. 

Total  sales  force  expense  . . .  .4.56% 

Advertising 19 

•    Other  selling 01 

Total  selling 4.76 

Question 
Would  comparisons  of  the  figures  submitted  by  his 
bookkeeper  with  those  published  by  the  Bureau  lead 
to  any  conclusions? 


Problem  296 
Figuring  Mark-up 

C.  F.  Dunbar,  the  sales  manager  of  the  Johnsville 
Company,  has  received  several  complaints  from  his 
salesmen  because  of  the  gross  profit  that  the  company 
offers  wholesale  grocers.  The  Johnsville  Company 
produces  a  breakfast  food  which  is  nationally  adver- 
tised and  distributed  through  a  national  selling 
organization. 

Mr.  Arthur  Smith,  one  of  the  salesmen,  has  reported 
that  three  of  his  customers  have  stated  that  their 
average  cost  of  doing  business  was  9%  of  net  sales,  and 
that  the  margin  of  profit  allowed  by  the  Johnsville 
Company  was  not  sufficient.    This  salesman  states  that 


r)14        I'KOBLEMS  IN  SALES  MANAGEMENT 

he  has  told  thom  tluit  for  every  $10,000  purchase  they 
are  making  a  {z;r()ss  profit  of  $1,000,  and  that  as  their 
cost  of  doing  business  is  9%  this  leaves  them  a  net 
profit  of  $100  on  every  thousand  dollars  of  their  product 
purchased.  The  wholesalers  have  replied  that  Mr. 
Smith  is  not  figuring  operating  expenses  and  net  profit 
on  the  same  basis.  They  state  that,  when  they  use  the 
expression  "9%  to  do  business,"  their  percentage  is 
based  on  net  sales  and  not  on  cost  of  goods  sold,  or 
purchased.  Mr.  Smith  says  that  he  has  pointed  out  to 
these  wholesalers  that  the  average  turnover  for  their 
product  is  20  times  a  year,  and  that  when  they  are 
allowed  a  mark-up  of  10%  with  operating  expenses  of 
9%  they  obtain  a  net  profit  of  20%  a  year.  This  the 
wholesalers  have  violentl}^  disputed,  asserting  that  their 
net  profit  based  on  the  percentage  of  sales  remains  the 
same  irrespective  of  the  rate  of  stock-turn.  Mr.  Smith 
has  admitted  to  Mr.  Dunbar  that  he  cannot  answer 
these  arguments  and  has  asked  for  advice.  He  wishes 
to  know  whether  or  not  the  arguments  he  has  been 
using  are  sound. 

Question 
Has  Mr.  Smith  correctly  answered  the  points  brought 
out  by  the  wholesale  customers? 


Problem  '297 
Control  in  the  Wholesale  Dry  Goods  Business 

The  Gibbs-Moore  Dry  Goods  Company  of  New  York 
is  a  jobbing  house  specializing  in  hosiery  and  underwear. 
Approximately  75%  of  sales  are  confined  to  the  eastern 
states,  while  the  balance  is  distributed  throughout  the 
entire  United  States.  The  organization  is  headed  by 
the  president,  under  whom  are  the  treasurer,  credit 
manager,  sales  manager,  and  10  department  managers. 


CONTROL  OF  SALES  OPERATIONS  515 

Prior  to  1921,  each  department  manager  had  charge  of 
the  buying  for  his  department,  subject  to  the  super- 
vision of  the  treasurer  and  president.  Each,  however, 
was  allowed  almost  free  rein  as  to  the  quantities  of 
goods  purchased.  In  general,  two  distinct  methods  of 
purchasing  were  employed :  1 .  Orders  for  staple 
merchandise  were  placed  far  in  advance  of  the  season, 
as  long  as  eight  or  nine  months.  This  held  true  for  such 
products  as  hosiery,  underwear,  and  gloves.  Further 
orders  were  made  during  the  season  as  sales  seemed  to 
warrant.  2.  Orders  for  goods  affected  by  style  changes 
were  placed  shortly  before  the  beginning  of  the  season 
and  in  quantities  during  the  season.  Past  records  and 
present  tendencies  were  used  as  guides  in  buying  this 
type  of  merchandise. 

Though  the  company  had  the  rudiments  of  a  good 
system  of  coordinating  purchases  and  sales,  the  methods 
had  never  been  perfected,  so  that  overstocks  and  shorts 
were  of  frequent  occurrence.  Upon  examination^  it 
appeared  each  buyer  was  allowed  to  use  his  own  judg- 
ment in  placing  advance  orders,  with  the  result  that 
these  were  sometimes  too  large  for  a  season's  needs, 
while  the  financial  demands  arising  from  these  orders 
strained  the  company's  credit.  Furthermore,  no  satis- 
factory method  of  keeping  inventory  as  to  quantities, 
styles,  sizes,  and  mills  was  in  use  so  that  in  some  cases 
shortages  resulted,  while  in  other  instances  inventory 
was  left  at  the  end  of  a  season.  In  the  absence  of  a 
statistical  department  the  accounting  department  was 
depended  upon  to  furnish  such  sales  data  as  were 
needed.  As  a  consequence,  buyers  experienced  diffi- 
culty in  ascertaining  at  any  time  the  exact  relation  of 
sales  to  purchases. 

When  the  buyers'  market  came  in  1920  and  sales  fell 
very  materially,  the  company  found  itself  burdened  at 
the  end  of  the  year  with  a  heavy  inventory,  while 
its  obligations  were  large.  A  reorganization  became 
necessary. 

Mr.  James  Henry,  an  executive  trained  in  the  dry 
goods  business,  took  charge,  and  after  a  survey  of  the 


r)l(i        rUOBJvKMS  IN  SALES  MANAGEMENT 

inctliods   of   the   compiiny    made    the    following   pre- 
liminary report  to  the  board  of  directors: 

A  system  of  control  for  w  holosale  concerns  must  recog- 
nize the  s^eat  responsihilit  \-  of  (he  l)uyers.  Any  system 
which  is  adopted  must  In-  kept  m  effect  continuously  if  it 
is  to  be  working  at  times  when  it  is  of  particular  service, 
and  provision  should  he  made  to  rh(>ck  both  immediate 
and  advance  purciiascs.  I  recomnicud  ihat  the  following 
suggestions  should  i)c  worked  out  to  appl}'  to  this  business: 

1.  The  executives  should  figure  tiie  gross  business 
profit  on  the  capital  of  the  company.  Annual  sales  should 
be  four  or  five  times  the  capital.  That  figure  should  be  the 
limit,  and  total  purchases  should  be  governed  thereby. 

2.  The  executives  should  apportion  sales  to  each 
department  so  that  one  department  ma}'  not  encroach  upon 
the  other.  They  should  also  divide  purchases  into  spring 
and  fall,  advance  and  innnediate.  Provision  should  be 
made  for  cash  to  be  available  for  immediate  delivery  pur- 
chases. 

3.  Ever}'  order  should  be  estimated  before  being  sent. 

4.  Each  department  should  have  a  plan  to  check  quanti- 
ties, styles,  mills,  etc.,  to  avoid  duplicate  orders. 

5.  A  statistical  department  should  be  established  to 
collect  and  interpret  data  and  to  make  periodical  reports 
to  the  president  and  manager. 

6.  Deliv(>ries  should  be  arranged  toaccommodatefinances. 
The  burden  of  each  month  should  be  known  and  data  should 
be  available  to  show  how  far  receipts  will  care  for  invoices. 

Question 
Would  the  histallation  of  such  a  system  solve  the 
difficulties  of  the  Gibbs-Moore  Dry  Goods  Company? 


CONTROL  OF  SALES  OPERATIONS  517 

Pk(M{li:m  ^298 
Sales  Control  System 

The  Swain  Engineering  Company,  manufacturing  a 
line  of  construction  and  road  machinery,  inckiding 
industrial  trucks,  concrete  mixers,  excavating  machines, 
et  cetera.,  sells  its  product  mainly  direct  to  consumers 
through  branch  offices  located  in  all  the  important 
centers  of  the  United  States. 

In  order  to  give  more  information  to  executives  of 
the  organization  for  control  purposes,  the  following 
system  of  reports  is  suggested: 

Sales  Department  Report  No.  1 
Graphic  chart  to  be  forwarded  weekly  to  all  members  of 
the  Swain  Engineering  Company,  heads  of  other  depart- 
ments and  executives  by  the  General  Sales  Manager. 
This  chart  to  show: 

1st — Daily  plotting  of  total  sales  for  the  current  year. 
2d — Daily  plotting  of  total  sales  for  preceding  year. 
3d — Monthly  plotting  of  total  sales  expense  for  cur- 
rent year. 
4th — Monthly  plotting  of  total  sales  expense  for  pre- 
ceding year. 
5th — Monthly  tendency  lines  for  each  of  above. 
6th — Monthly  tendency  lines  showing  the  relation  of 
total  sales  expense  to  total  sales  for  current  year. 
7th — The  same  for  the  preceding  year. 

Sales  Department  Report  No.  2 
A  weekly  report  to  be  made  by  each  home  office  depart- 
ment manager  to  the  General  Sales  Manager  showing  for 
the  respective  departments: 

1st — The  total  sales  during  the  preceding  week  (both  for 
the  present  and  the  preceding  year)  of  equipment 
by  items  under  the  jurisdiction  of  the  department, 
arranged  by  districts  according  to  the  Swain  Engi- 
neering Company  offices  (export  sales  to  be  shown 
separately  in  one  column  and  all  other  sales, "such 
as  agency,  open  territory,  etc.,  to  be  grouped  to- 
gether in  another  column)  giving  both  the  number 
of  items  and  the  factory  selling  prices  with  totals 
for  each  district  and  for  each  item  of  equipment. 
2d — Cancellations  received  during  preceding  week, 
specifying  items  of  equipment  and  amount  canceled 
and  reasons  for  cancellation. 


r)lS        I'kOBLKMS  IN  SALKS  MANAGEMENT 

NOTE:  Ocijurt  iiH'iit  sulxlixisions  to  \iv  shown  if 
necessary. 

NOTE:  Report  for  week  is  due  in  (Jencial  Sales  Man- 
ager's office  on  Wednesday  of  the  foUowinji;  week. 

Salks   1)i;i'.\uimi;.\i'   Hki'oiit  No.  3 
A  inontlil>-  rccapif uhition  of  Sales  Dcpai'tnient   Report 
No.  2  for  I  lie   pi'('C(Mli!)<i;  month   (execpt    coi-rccted)   to  be 
made   by   each    home   oflicc   drpait  nicril    niaiia;i;er   to   the 
General  Sales  Mana^ci'. 

NOTE:    This  report   is  (hie  in  ( lencrai  Sales  Manager's 

offiee  on  the  oth  of  the  following  month. 
NOTE:    Department  divisions  to  he  shown,  if  necessary. 

Salks  Dki'autment  Rki'ort  No.  4 
A  monthly  summary  of  information  shown  on  Sales 
Department  Rcpoi't  No.  3,  with  comparison  with  budget 
amounts,  to  l)e  made  and  forwarded  to  executives,  all  sales 
department  members,  and  heads  of  ()th(M-  departments  by 
the  lOth  of  the  fdllowiniu;  month  by  the  (Jeneral  Sales 
Man  age  1-. 

Sales  Department  Report  No.  5 
A  monthly  report  to  be  made  by  the  Sales  Accounting 
Department  to  the  General  Sales  Manager  of  the  expense 
of  each  district  sales  office  and  each  home  sales  department, 
showing  the  following  foi'  tiie  ])r(M'e(ling  month  and  accumu- 
latively for  the  y(nir: 

1st — General  Expense. 

2d — Salaries  (and  Wages  for  Business  Department). 

3d — Traveling  Expense. 

4th— Office  Rent. 

5th — Warehouse  Rent  (for  Busint^ss  Department  only). 

6th — Office  Fixtures  and  Supi)lies. 

7th — Publicity  and  Advertising. 

8th — Convention  and  Association  Expense. 

9th — Miscellaneous. 

NOTE:  If  home  office  departments  have  divisions,  ex- 
pense shall  l)e  arranged  accordingly,  if  necessary, 
compared  with  Inidget  amounts  for  like  periods. 

NOTE:  Sales  overhead  shall  be  pro-rated  as  determined. 

NOTE:  This  report  is  due  in  General  Sales  Manager's 
office  by  the  8th  of  the  following  month. 

Sales  Department  Executives'  Report  No.  6 
A  monthly  report  to  be  made  bj'  the  General  Sales  Man- 
ager to  Homes  Sales  Department  heads  and  District  Office 
Managers,  showing: 


CONTROL  OF  SALES  OPERATIONS  519 

1st — Budget  expense,  amounts  bj^  items  for  month. 

2d — The  total  expense  by  items  of  the  Sales  Depart- 
ment for  the  preceding  month. 

3d — The  relationship  of  the  total  expense  to  the  total 
volume  of  domestic  sales  for  the  preceding  month. 

4th — The  budget  items  of  expense  for  the  month  for  a 
home  sales  department  order  office. 

5th — The  total  expense  by  items  of  the  same  sales  de- 
partment or  district  office  for  the  preceding  month. 

6th — The  relationship  of  the  expense  of  the  department 
or  office  to  its  sales  for  preceding  month. 

Sales  Department  Report  No.  7 
Report  of  Adjustment  of  Complaint 

(Date) 

L  Name  of  customer. 

2.  Home  office  address  of  customer. 

3.  Field  office  address  of  customer  where  equipment  is 
located. 

4.  Name   of   person   in    customer's    home    office    who 
made  complaint. 

5.  Title  of  above. 

6.  Name  of  man  in  charge  of  job  where  equipment  is 
located. 

7.  Title  of  above. 

8.  Name  of  man  in  charge  of  equipment  complained  of. 

9.  Resume  of  complaint  as  made  1)}^  customer. 
10.  Actual  troubles  as  found  by  our  inspector. 
IL  Actual  or  theoretical  cause  of  trouble. 

12.  How  trouble  was  remedied. 

13.  If  additional  parts  necessary  to  remedy,  so  state 
and  accompany  report  with  memorandum  order 
covering  same. 

14.  If  services  of  shop  man  necessary  to  remedy  mechani- 
cal defects  or  trouble  caused  by  faulty  design,  so 
state  and  give  full  report  in  triplicate  on  separate 
report  blank,  stating  actual  condition  of  equipment, 
cause  of  trouble  and  suggested  remedy.  (This 
report  will  then  be  turned  over  to  Production 
Division  for  necessary  attention.) 

15.  Give  total  of  expense  of  inspector,  itemizing  as 
follows: 

Traveling 

Hotel  &  Meals 

Telephone  &  Telegraph 

Incidentals 

Repairs  purchased 


520        PHOBLKMS  IN  SALES  MANAGEMENT 

1(1.  (live  su^frcstccl  .st'ttl(Mnont   of  invoice   if  necessary, 
showing  sufiKostcd  amount  of  credit  to  be  allowed, 
17.     ('live  iianic  of  inspector, 

(Signed) 

Salks  J)i:i'autmi:xt  Hepokt  No.  8 
Report  of  Installation 

(Date) 

1.  Name  of  cuslonicr, 

2.  Home  office  address  of  customer. 

3.  Field  office  address  of  customer  where  equipment  is 
located. 

4.  Name  of  man  in  charge  of  job. 

5.  Name  of  man  in  charge  of  equipment. 

6.  Name  of  Master  Mechanic  on  job, 

7.  Report  condition  of  equipment  as  found  |by  instal- 
lation man. 

8.  Report  any   breakages  or  damages   to   equipment; 
specify : 

1st — Cause  of  damage, 
2d — Parts  needed  for  replacement, 
3d — Send  in  order  in  duplicate  for  necessary  parts, 
specifying: 

(a)  "No  charge"  and  reason, 
(6)  "Charge"  and  reason. 

If  parts  furnished  "No  charge"  send 
express  or  freight  receipt  properly  noted 
as  to  damage  to  enable  us  to  enter  claim 
against  carrier. 

9.  Give  estimate  of  time  required  to  complete  instal- 
lation. 

10.  Give  brief  report  on  personnel  at  job  so  that  we  may 
obtain  advance  ideas  as  to  trouble  we  will  eventually 
run  into  with  equipment  on  account  of  improper 
handling. 

11,  General  remarks 

Questions 

1.  Should  the  plan  be  adopted? 
(a)  Is  it  complete? 

2.  What   rej^orts   are    needed    from    salesmen    and 
branch  managers  in  order  to  carry  out  the  plan? 


CONTROL  OF  SALES  OPERATIONS 


521 


: 

'|2 

J         § 

: 

s 

'1 

i 

1      3  .g 

-if-       A  1 
j          ^  3 

1 

^    -      -      :      - 

i    i« 

i 

g     :      :      :      r 

;; 

c 

s 

1       i 

1 

— 

J      - 

a   1 

.       . 

?j: 

s 

io  ---'•-  '- 

15^5 

s 

s 

s 

J         1 

! 

1 

COMPANY 

Y. 
EPORT 

■i 

> 

1 

a 

1 

J         1        •' 

6  ai    5 

s 

11         ° 

e 

■? 

gei'r 

1 

Jl_     1 

in  = 

-    M 

Q 

Z 

° 

i 

!s 

s 

o« 

1 

Q^"^ 

>• 
■< 

a 

X 

!>■ 

p 

J-   i 

1   j 

a 

1 

S 

n 

> 

.EVELAN 

BUFFALO 
LY    SALES 

< 

B 

1 

1 

3 

0 

li 

io 

r 

*         a.            5            I            >"            H 

\(         "     S      S      i     ,S      g 

^ 

1 

°2 

s 

-h 

i  «• 

d    I 

Ji 

!§• 

1 

8 

CALLED  ON 

X 
H 

1 

z 

1  i 

j 

ii 

i  -a 

ORE 

5       a 

s 

a    °  '■-: 

t 

s 

i 

R 

•3 

■s 

Z 

o      S 

'3 

>i                          : 

I      ^ 

.g 

a 

i 

^      1 

1 

1 

H 

1 

i) 

:    B 

2 

1 

^^ 

z 

1 

ig 

KEY  TO  BE  USED 
C — Grocery 

DEPT.— Dopt. 
J— Jobber 

Nam* 

Left  Home  or  Hote 
First  Call  (Arrived 
Last  CaU  (Left).... 

°    3 
a    8 

1 
1 

= 

i 

=    =    = 

13 

'-I 

i  °l 

r.22      I'KoiJLiOMs  i\  s\ij;s  maxa(;1':mknt 

l'l{«)ULK.M    W\) 
("o.NlUOI.    SvslKM     I()|{    (JUOCKUY    Sl'KC  1 ALTY    Co.Ml'AXY 

Tho  ( "lc\(>l:iii(l  ("oinpany  manufactures  a  limited 
iiumhci-  of  nationally  adverti.sed  specialties  in  a  line 
handled  by  all  grocery  stores  and  by  many  druK  and 
d('l)artm(Mit  stores.  The  company'  sells  thi-ough  jol)hers, 
but  maintains  a  large  sales  force  to  push  its  product 
through  sales  to  retailers,  which  are  turned  over  to 
jobbers.  'Hie  main  sales  office  is  located  in  New  York; 
from  this  office  are  directed  sales  for  the  New  York 
district,  as  well  as  for  the  entire  country.  In  each  of 
the  seven  di\isions  may  be  found  one  or  more  districts 
and  several  ten-it ories  assigned  to  the  indi\idual 
salesmen. 

Th(»  basis  foi-  the  system  of  control  of  salesmen  is 
found  in  two  reports,  which  are  required  of  each  of 
the  three  types  of  salesmen.  There  are  regular  sales- 
men, who  in  many  territories  call  upon  grocer}-,  drug, 
department  store,  and  jobber  trade.  In  the  more 
densely  settled  districts  special  salesmen  are  assigned 
to  the  drug  trade  and  to  jobbers.  The  daily  sales  report 
required  of  iiW  salesmen  selling  retail  trade  is  illustrated 
on  page  521 : 

The  following  is  the  town  report : 


TOWN  REPORT 

Name  of  Town 

State 

Terrl.  No. 

PoDuUtion 

Cro. 

D'OK 

Miac. 

No.  Calls  Made 

B.  O. 

No.  Sold 

WaUr                                    Hard     I 

Soft                1 

1 

SUrted 

SOAP 
FLAKES 

COMPLEXION 
SOAP 

WASHING 
POWDER 

DYE 
SOAP 

TOILET 
SOAP 

Finiihad 

too 

SO 

100 

so 

ICO 

Gto»« 

Dot. 

IIS 

120 

Jobbing  Sales 

Retail  Sale. 

Retail  Stocked  and  Sold 

Remarlu 

Notad 

Saleaman 

1 

CONTROL  OF  SALES  OPERATIONS  523 

The  original  of  each  of  the  two  reports  is  sent  to  the 
main  office  in  New  York,  the  copy  being  sent  with  the 
order  to  the  division  office.  The  division  office  then 
turns  the  orders  over  to  the  jobber  as  directed.  The 
daily  town  report  is  made  the  basis  of  a  report  summary, 
in  which  for  each  town  worked  is  gi\'en  the  following 
information:  date,  number  of  dealers  solicited,  hours 
worked,  number  of  calls,  number  of  interviews,  number 
of  sales,  with  a  recapitulation  under  the  heading 
"Trade  calls,"  number  of  dealers  stocked  and  sold 
retail  according  to  products,  number  of  dealers  sold 
retail  including  introductory  and  repeat  sales  by  prod- 
ucts, number  of  introductory  sales  retail  by  products, 
percentage  brand  distribution  by  products,  number  of 
standard  cases  sold  by  products,  special  deals  by 
products.  Each  daily  report  summary  contains  the 
division,  district,  and  sales  territory,  headquarters 
town,  with  the  name  of  the  salesmen  and  sales  classifica- 
tion. Separate  lines  are  given  to  grocers,  druggists, 
miscellaneous  and  jobbers. 

The  second  report  summary,  based  upon  the  daily 
sales  report,  contains  a  summary  of  the  work  of  the 
various  salesmen  classified  according  to  the  types  of 
trade — grocer,  druggist,  miscellaneous,  and  jobber. 
Regular  salesmen,  job  salesmen  and  drug  salesmen  are 
grouped  together.  On  each  line  are  given  the  days  and 
dates  worked,  number  of  trade  calls,  number  of  inter- 
views, number  of  sales,  number  stocked  and  sold  retail 
by  products,  number  sold  retail  including  introductory 
and  repeat  sales  by  products,  number  introductory 
sales  retail  by  products,  retail  special  deals.  This 
information,  as  stated  above,  is  given  for  each  of  the 
classes  of  customers  visited. 

Weekly  a  large  sales  summary  sheet  is  filled  out, 
giving  for  divisions,  districts  and  territories  the  sales 
of  each  of  the  products  for  the  current  week,  the 
corresponding  week  last  year,  the  current  quarter  and 
the  corresponding  quarter  last  year.  A  quarterly' 
condensed  sales  summary  sheet  is  drawn  up,  giving  the 
sales  for  each  territory  of  the  United  States.     From 


■)21        PlioliLllMS  IX  SALES  MANAGEMENT 

the   town   report   is  {Iniwii   information   for  the   rard 
record  of  towns  kept  in  the  New  York  ofhce. 

Qvesdon 
Oiitliiic  tli(^  syst(Mii  of  i'('('()i-(ls  which  should  he  kept 
in  the  hraucli  ofliccs,  and  the  I'ecoi'ds  wliicli  llie  home 
oflice  should  Iveep  to  control  district  managers. 


TuouLKM  :300 
Perpetual  Inventory 

The  Sumner  Wholesale  Grocery  Company,  located 
in  Boston,  has  annual  sales  of  approxiniatel}^  $3,000,000. 
It  has  a  large  volume  of  business  in  staple  and  medium- 
price  groceries  and  an  extensive  business  in  api^roved 
brands  of  good  quality.  It  imports  large  quantities  of 
coffee,  tea,  and  other  foreign  products.  The  company 
employs  15  salesmen  and  distributes  its  product 
throughout  New  England. 

During  the  earl}^  part  of  1920,  because  of  the  general 
depression  in  the  trade,  the  company  was  purchasing 
only  in  small  quantities  and  had  been  successful  in 
greatly  reducing  its  inventory.  Because  of  its  low 
inventory  and  method  of  purchasing,  it  frequently 
happened  that  orders  from  ret^iilers  would  be  held  up, 
as  the  merchandise  ordered  would  not  be  on  hand.  In 
many  cases  it  required  a  week  to  replenish  stocks,  and 
a  few  instances  occurred  where  deliveries  were  delayed 
three  ^^"eeks. 

Mr.  John,  the  sales  manager,  had  received  numerous 
complaints  from  his  customers  because  of  the  delay  in 
shipment  and  made  several  protests  to  the  executives 
about  their  policy  in  carrying  such  small  stocks.  The 
executives  replied  that  their  method  of  purchasing  was 


CONTROL  OF  SALES  OPERATIONS 


525 


absolutely  essential  during  the  period  of  depression  that 
they  were  passing  through  and  asked  Mr,  John  for 
suggestions.  After  making  a  preliminary  study  of  the 
problem  Mr.  John  suggested  that  a  perpetual  inventory 
be  kept  for  all  lines  carried  and  submitted  the  following 
form. 


1 

o,..,«. 

R«.d 

-" 

<w.™d 

RM'd 

5.U 

B.l.„„ 

D... 

Or...^ 

>..•.. 

»..d 

BaluiM  r  D*t. 

«-rf 

lUo-d 

«a 

I>Um> 

'- 

L 

u 

' J 

Lj 

u 

L 

1 1 

1 

u 

= 

_j- 

1 

. 



=^ 

- 

- 

— 

^ 

- 

- 

7L-. 

- 

MAXIMUM  STOCK                                            ORDER  WHEN                                                        RUSH  ORDER  WHEN                                             j 

ARTICLE                       1         SIZE           1                BRAND                   1          STOCK  UNIT            1      '^'C"!,'        1 

Buildinf          noor    1 

J J___: L L I 

— -J-.- 

Questio7is 

1.  Would  it  have  been  practicable  for  the  executives 
of  the  Sumner  Wholesale  Grocery  Company  to  install 
a  perpetual  inventory? 

2.  If  so,  should  the  form  submitted  have  been 
changed? 


Problem  301 
Sales  Control  for  Confectionery  Manufacturer 

The  Mott  Confectionery  Company  operates  a  factory 
at  Boston,  Mass.  Its  product  is  chocolate-covered 
confectionery.  The  sales  department  is  in  charge  of 
the  president.  There  are  nine  salesmen:  six  of  them 
are  combination  salesmen,  carrying  non-competing 
lines,  receiving  5%  commission  on  sales  and  paying 
their  own  expenses;  three  are  in  the  exclusive  employ  of 


.-)2()        lM{()lil>l':.MS   l.\  SALl-:s  MANAGEMENT 

the  ('()nii)any  niul  arc  paid  on  the  salary  and  coniniission 
basis.  The  coinbiiiation  sak'sineii  do  not  send  in 
reports,  although  at  the  end  of  each  trip,  a  verbal  report 
is  given  to  the  president.  Tlie  three  company  salesmen 
make  daily  rcpoi'ls.  The  tei'ritories  covered  b}'  these 
salesmen  are  as  follows:  (1)  Maine;  (2)  New  Hampshire 
and  Vermont;  (3)  Massachusetts;  (4)  Connecticut  and 
Rhode  Island;  (5)  New  York  City;  (0)  New  York 
State;  (7)  Philadelphia;  (8)  Western  Pennsylvania;  (9) 
Maryland,  \'irginia,  and  West  Virginia.  Divisions  are 
determined  b}'  intensity  of  demand.  The  salesmen  are 
controlled  directly  from  the  home  office  in  Cambridge. 
TIh^  sales  manager  makes  personal  visits  to  each 
district. 

There  is  no  ad\ertising  department  or  appropriation, 
though  some  dealer  helps  consisting  of  show  cards,  ban- 
ners and  dummy  boxes  are  distributed.  The  price  of 
goods  to  the  jobber  is  determined  by  adding  the  war  tax 
of  5%,  salesmen's  commission  of  o'^y',  and  the  com- 
pany's profit  of  6%  to  cost  of  manufacturing  the 
article.  The  price  to  the  retailer  is  20%  above  jobber's 
cost,  and  price  to  consumer  is  -^0%  above  jobber's 
selling  price.  The  company  has  never  fixed  retail  prices 
of  any  article,  although  it  does  make  up  certain  package 
confectionery  to  sell  at  a  certain  price.  The  sales 
manager  is  the  sole  judge  of  credits.  The  system  is 
loose,  with  many  small  accounts.  The  terms  are  2% 
10  days;  net  30.  The  company  is  very  lenient.  The 
salesmen's  reports  are  given  much  weight.  Salesmen 
often  make  collections,  although  not  compelled  to  do 
so.  The  company  sells  jobbers,  retailers,  and  con- 
sumers. In  New  England,  sales  are  made  to  retailers 
only.  Outside  New  England,  sales  are  principally  to 
jobbers.  No  sales  are  made  to  the  legitimate  trade  of 
the  jobber.  The  company  has  granted  exclusive  agency 
rights  to  certain  dealers  located  in  Bronx,  Newport, 
Concord  (N.  H.),  three  in  Newark,  and  several  in 
Maine.  Annual  sales  amount  to  S250,000,  the  bulk 
being  in  New  York,  Philadelphia,  ^Maryland,  and 
Massachusetts. 


CONTROL  OF  SALES  OPERATIONS  527 

Due  to  financial  difficulties  late  in  1920,  the  concern 
has  come  under  the  control  of  a  new  group  of  interests. 
These  men  plan  to  do  away  with  the  former  old- 
fashioned  methods.  It  is  their  desire  to  increase  the 
sale  of  their  product  at  least  50%  to  take  up  the  excess 
capacity  of  the  factory.  It  is  felt  that  this  will  entail 
a  considerable  revision  in  both  organization  and 
methods  of  operation. 

Questions 

1.  What  matters  have  to  be  decided  by  the  board 
of  directors,  in  order  that  the  sales  manager  may 
prepare  a  plan  for  securing  the  increase  in  business? 

2.  What  features  of  a  selling  campaign  are  usually 
determined  by  the  board  of  directors  or  president  of, 
a  corporation? 

3.  Outline  a  system  of  sales  control,  which  will  show 
the  managers  at  any  time  the  exact  status  of  selling 
operations  and  results. 


Problem  302 
Control  of  Sales  by  Shoe  Manufacturers 

The  Sears  Company,  located  at  Lynn,  Mass.,  manu- 
factures women's  fine  shoes,  the  annual  sales  being 
approximately  $2,000,000.  The  factory  has  a  daily 
capacity  of  2,500  pairs.  Since  the  style  factor  is 
important,  the  company  is  careful  to  have  representa- 
tives in  all  shoe  conventions  to  inspect  displays  of  styles 
for  the  coming  season.  While  the  company  gives  con- 
siderable effort  to  developing  new  styles,  it  aims  to 
follow  a  rather  conservative  policy  and  to  adopt  style 
changes  which  have  been  successful  rather  than  to 
originate  new  styles. 


528        riU)BLKMS  IN  SALES  MANAGEMENT 

The  present  sales  organization  consists  of  a  general 
sales  manager,  two  assistant  sales  managers,  and  a 
road  force  of  24  salesmen.  The  salesmen  attempt 
to  coNcr  the  entire  I'liited  States,  making  two  trips 
each  y(>ar.  lOach  of  the  salesmen  is  directly  re- 
sponsible to  the  general  sales  manager,  as  are  the 
three  assistant  sales  managers.  Salesmen's  territories 
are  not  clearly  definc^d.  It  has  been  the  custom  of  the 
sales  manager  to  map  out  each  year  the  semi-annual 
trips  of  each  salesman.  The  same  route  is  generally 
followed  from  year  to  year.  All  salesmen  are  paid  on  a 
strictly  commission  basis.  No  expense  is  allowed,  with 
the  exception  of  railway  fares,  which  are  paid  in  order 
to  equalize  the  expenses  of  salesmen  in  various  parts  of 
the  country.  The  company  has  not  required  the  sales- 
man to  make  a  special  report  to  the  general  sales 
manager  upon  his  return  from  a  trip  giving  his  impres- 
sions as  to  market  conditions  in  his  territories,  his  ideas 
as  to  sales  possibilities,  and  facts  and  opinions  as  to 
the  retailers  to  whom  he  has  sold  goods.  The  salesman 
is  practically  his  own  master  while  on  the  road,  receiving 
few  instructions  from  the  home  office  and  making  no 
reports  until  the  trip  is  completed.  In  the  opinion  of 
the  sales  manager,  the  company  in  the  past  has  con- 
sidered that  the  amount  of  a  traveler's  sales  was 
sufficient  report  of  how  the  salesman  was  getting  along 
and  sufficient  indication  of  the  conditions  in  his 
territory.  The  officials  of  the  company  realize  that 
they  do  not  obtain  the  best  results  possible  from  the 
territory  covered. 

No  advertising  department  is  maintained.  The 
company  officials  prepare  the  advertising  copy  in 
conference.  No  plan  is  followed  in  advertising, 
apparently  the  only  idea  being  to  have  the  name  of  the 
company  appear  in  the  trade  journals  from  time  to 
time.  No  definite  amount  is  appropriated  for  advertis- 
ing and  no  attempt  is  made  to  check  the  results.  The 
compan}'  issues  a  catalog  to  the  retail  trade,  which  is 
sent  to  all  its  customers  and  to  prospects  whose  names 
are  obtained  through  various  agencies. 


CONTROL  OF  SALES  OPERATIONS  529 

The  company  sells  to  retailers  only,  but  does  not 
follow  the  exclusive  agency  plan,  preferring  to  sell  to 
all  reputable  dealers  who  will  handle  its  goods.  These 
retailers  order  the  bulk  of  their  goods  at  the  semi- 
annual calls  of  the  salesmen,  sending  in  reorders  after 
the  season  opens. 

Question 
Outline  a  system  for  control  of  traveling  salesmen, 
which  will  give  information  needed  by  the  sales  manager 
in  order  to  properly  direct  sales. 


Problem  303 
Sales  Records 

The  Davis  Company  manufactures  a  line  of  clocks 
which  it  sells  through  jobbers  throughout  the  United 
States. 

In  the  sales  department  the  following  records  are 
kept :  route  lists,  showing  route,  location,  and  dates  of 
salesmen;  sales  quotas  of  salesmen,  with  records  of  past 
performances;  copies  of  bulletins  issued;  efficiency  of 
salesmen;  inquiries  and  quotations  for  follow-up  uses; 
advertising  program;  card  file  of  "A"  distributors; 
card  file  of  "A A"  distributors;  mailing-list  as  agreed 
upon;  monthly  report  to  general  manager  as  to  sales 
efficiency  compared  with  sales  expenses;  scrap  book  of 
firm's  advertisements;  scrap  book  of  circulars,  booklets, 
inserts;  scrap  book  of  competitors'  advertisements; 
scrap  book  of  competitors'  clocks  compared  with 
firm's;  record  of  electros  on  order,  in  stock,  with 
customers  or  printer,  who  and  what;  record  where 
salesmen's  checks  and  mail  are  sent  daily;  and  from  the 


530        PROBLEMS  IN  SALES  MANAGEMENT 

yalesmon's  records  of  customers  and  prospective 
customers,  g;oods  interested  in  or  used,  name  and  type 
of  buyers,  hobby  of  buyer. 

Question 
^^^Klt  other  records  are  needed  for  complete  control 
of  sales  operations? 


Problem  304 

Administrative  Control  of  Sales  Department — 

Budget  System 

From  the  view-point  of  both  business  man  and 
economist,  that  enterprise  is  most  successful  which 
most  efficiently  coordinates  its  functions  of  production 
or  purchase  of  goods,  distribution,  and  financing, 
meanwhile  properly  maintaining  and  adapting  plant 
and  equipment.  As  a  business  increases  in  size,  the 
difficulty  of  coordination  of  these  operations  is  in- 
creased. Among  the  methods  used  by  administrators 
and  executives  for  efTecting  coordination  is  the  budget 
system.  The  budget  system  requires  good  records  of 
sales,  production,  and  finance,  a  knowledge  of  the 
market,  and  much  judgment  as  to  trend  of  business 
conditions  during  the  period  for  which  the  budget  is 
to  be  made.  But  it  is  claimed  that  the  budget  gives  a 
degree  of  control  and  definiteness  in  planning  which 
cannot  be  secured  otherwise. 

The  budget  system,  as  applied  to  business  concerns, 
usually  takes  the  sales  budget  as  the  starting  point. 
Upon  the  estimates  of  possible  sales  hinge  the  estimates 
of  production,  the  planning  of  new  plant  and  equip- 
ment, the  internal  financing  operations,  and  possible 
increase  of  working  capital.  In  estimating  sales  for  a 
future  period,  the  length  of  which  is  determined  by  the 
nature  of  the  business  and  general  conditions,  the  first 


CONTROL  OF  SALES  OPERATIONS  531 

step  is  usually  an  analysis  of  past  sales  by  territories, 
products,  terms,  periods  of  year.  Upon  these  are  based 
estimates  of  ensuing  period  sales,  weight  being  given  to 
various  factors,  such  as  policies  of  the  concern,  general 
conditions  in  territory,  trend  of  demand  for  particular 
product,  capacity  of  sales  department  to  dispose  of 
goods,  etc.  During  each  budget  period,  final  budget 
estimates  are  revised  upon  the  basis  of  actual  perform- 
ance so  as  to  provide  currently  for  correction  of  errors 
of  judgment.  The  sales  estimates  are  committed  to  the 
production  department,  financial  estimates  are  pre- 
pared, and  administrative  officers  issue  the  master 
budget. 

The  Walworth  Manufacturing  Company,  in  its 
application  of  a  budget  system,  found  that  the  size  of 
its  line  rendered  the  preparation  of  sales  and  produc- 
tion estimates  very  burdensome.  In  the  words  of  the 
president  of  the  company,  in  an  address  to  the  Taylor 
Society : 

We  have  picked  out  of  our  vast  line  of  some  twenty- 
three  thousand  different  finished  items  six  hundred  which 
we  consider  as  "significant."  That  list  of' six  hundred  was 
worked  over  by  all  our  departments.  Our  original  thought 
was  that  we  could  pick  out  five  hundred  items  as  a  test,  but 
as  we  found  it  was  absolutely  impossible  to  confine  ourselves 
to  five  hundred  the  list  was  expanded  to  six  hundred.  This 
list  was  made  with  the  help  of  all  departments  of  our 
business — sales,  production,  and  financial.  We  are  using 
that  list  as  the  basis  of  our  sales  and  production  campaign. 
It  is  the  foundation  of  our  budget  system.  We  are  asking 
each  one  of  our  merchandising  units  to  use  those  six 
hundred  significant  items  as  the  basis  of  their  sales  estimate 
for  the  first  quarter  of  1921.  To  do  this  they  must  study 
their  own  businesses  in  detail.  It  gives  them  an  oppor- 
tunity to  really  learn  their  business  and  has  made  them 
realize  how  few  of  the  many  thousand  items  we  carry  have 
an  economical  turnover. 

The  sales  estimates  so  arrived  at  are  in  turn  submitted 
to  the  Home  Office  and  after  proper  revision  and  consoli- 
dation are  made  the  basis  on  which  we  predicate  our  pro- 
duction program  and  our  finance  program.  That  is  a 
detail  of  the  whole  greater  budget  system  which  we  are 
working  out,  the  one  of  first  finding  out  our  trade  require- 


r>:v2      ri{()i?i,i;Ms  i.\  salI'Is  management 

incuts,  then  kcyiiifj;  those  into  our  own  production  ability, 
basing  our  linanciii^i  profirani  on  the  result,  and  souic- 
tinies  finding  thai  il  is  impossible  to  finance  the  result  and 
therefore  niendinii,  our  program  to  suit  our  finances. 

(Jiwaliuns 

1.  Should  a  l)U(lj;(d  control  system  in  the  Walworth 
Manufnc'turiiig  C'ompuny  materially  afToct  the  organi- 
zation or  methods  of  operation  of  the  sales  department? 

2.  Is  a  bud{2;et  system  desirable  from  the  sales 
manager's  point  of  view? 

'.].   Wh'dt  are  the  weaknesses  of  the  sales  budget? 


PART  VIII 
FINANCING  OF  SALES 


PART  VIII 


FINANCING  OF  SALES 

OUTLINE 

A.  Capital  Requirements  for  Financing  Sales. 

1.  Amount  necessary  depending  upon 

(a)   Volume  of  sales. 

(6)   Length  of  period  between  receipt  of  goods 

by   sales   department   and   collection   of 

payment  after  sales. 

2.  Sources  of  funds  for  financing  sales. 

(a)  Working  capital  of  concern. 
(6)    Bank  loans. 

(c)    Current     sales,     discounting     acceptances, 
notes,  etc.,  borrowing  on  book  accounts. 

B.  Terms  of  Sale;    Relation  to  Financing. 

1.  Customary  terms  of  trade. 

2.  Determining   length   of   credit    term   for   specific 
enterprise  and  specific  customers. 

C.  Management  of  Credit. 

1.  Credit  granting;  bases  and  methods. 

2.  Control   of   credits   and   coordination   with   sales 

activities. 

3.  Collections  and  outstandings;    collection  methods 

from   view-point   of  development  of  sales  and 
good  will. 

D.  Special  Methods  of  Financing  Sales. 

1.  Finance  companies  in  the  automobile  trade. 

2.  Other  methods. 


535 


530      piioBLKMs  IX  sAi.iis  .MAXA( ;i:mi:xt 

GENEltAL  QlESTIOxXS* 

A.  CAri'i'Ai,  Requirements  for  FiNANciNf!  Sales. 

What  aiiioiiiit  of  workiiifi  capital  is  iicccssai'v  to  finance 
a  given  volume  of  sales  iindei'  given  conditions?  What  are 
tlie  sources  of  fun<ls  for  financing  sales?  To  what  extent 
should  the  control  of  sales  (Inancing  he  dissociated  from 
the  sales  department? 

B.  Terms  of  Sale;  Relation  to  Financing. 

What  methods  sliould  be  adopted  for  handling  credit  ac- 
counts? Should  terms  he  ligidly  observed?  How  should 
tiie  l(Migth  of  credit  Ici'ius  he  detei'mined  foi-  a  i)arlieular 
plant".' 

C     AIanagement  of  Credit. 

What  methods  should  be  adopted  of  coordinating  the 
work  of  the  credit  department  and  of  the  sales  deiiart- 
ment  in  passing  upon  api)lications  foi' credit?  How  can 
collections  be  managed  without  affecting  sales  adversely? 
Under  what  conditions  will  credit  outstanding  affect  sales 
activity? 

D.     Special  Methods  of  Financing  Sales. 

How  are  sales  which  require  considerable  outlay  on  the 
part  of  the  buyer  financed  so  as  to  broaden  the  market? 
What  are  the  advantages  and  disadvantages  of  the  con- 
signment method?  What  are  the  advantages  and  dis- 
advantages of  instalment  selling  from  the  view-point  of 
the  manufacturer? 

*X"o  siiifilo  i)ublicat ion  contains  reference  to  all  the  aspects  of  finan- 
cial inanaficinent  as  related  to  sales  operations.  The  general  works 
upon  niarketinp;  iiave  chapters  upon  the  role  of  financing  in  distribu- 
tion; for  instance,  C.  S.  Duncan,  jlarkdiitg:  J  is  Problems  and  Methods. 
Chapter  XII;  P.  T.  (,'herington,  Elements  of  Marketing,  Chapter  IX. 
Treatises  upon  corporation  finance  usually  deal  with  certain  phases  of 
the  financing  of  sales  in  connection  with  working  capital;  cf.  A.  S. 
Dewing,  The  Financial  Policy  nf  Corporations,  \'olunie  III,  Chapter  III, 
and  \'olunie  W ,  Chapter  \'II;  Jo.seph  M.  Regan,  Fiiiancing  of  Business. 
for  an  extended  list  of  references  on  problems  in  industrial  finance  as 
related  to  sales,  cf.  K.  K.  Lincoln,  Problems  in  In-dnstrial  Finance.  Up- 
on administration  of  credits,  cf.  ,1.  10.  llagerty,  Mercantile  Credit:  J.  A. 
Meyer,  Mercantile  Creilits  and  Collections;  Kttinger  and  Colieb,  Credits 
ami  Collections;  Blanton,  Credit:  Its  Principles  and  Practice;  A.  W.  Shaw 
Company,  Credits,  Collections,  and  Finance.  I  j)on  acceptances,  consult 
Park  Mathewson,  Acceptances:  Trade  and  Bankers';  publications  of  the 
American  Acceptance  Council;  numerous  pamj)hlets  issued  by  banks 
and  other  financial  institutions;  and  numerous  articles  in  the  financial 
and  trade  press. 


FINANCING  OF  SALES  537 

Problem  305 

Relation  of  Sales  Methods  to  Amount  of  Working 

Capital  Required 

In  the  endea\'or  to  establish  standards  of  operating 
and  financial  practice,  certain  relations  and  ratios  have 
been  set  up  by  general  consent  as  having  some  sig- 
nificance. While  these  standards  are  by  no  means 
established  as  correct,  they  are  of  assistance  in  judging 
the  soundness  of  financial  policies.  The  Harvard 
Bureau  of  Business  Research  has  endeavored  to  develop 
standards  in  retailing  for  the  percentage  of  cost  in 
comparison  with  the  gross  sales  of  the  business.  In 
manufacturing  corporations,  bankers  have  been  accus- 
tomed to  look  upon  the  ratio  of  liquid  assets  to  current 
liabilities  as  a  test  of  the  ability  to  meet  obligations 
promptly;  and,  in  many  cases,  the  ratio  of  two  to  one 
has  been  set  up  as  a  desirable  one.  The  experience  of 
the  past  few  years  has  shown  that  this  ratio  has  by  no 
means  universal  significance  and  that  standards  must 
be  established  not  only  for  industrial  corporations,  but 
also  for  particular  industries.  The  variations  between 
textile,  steel,  and  other  industries  are  so  marked  as  to 
require  different  standards. 

A  test,  which  is  sometimes  applied  by  financial  men 
to  corporations,  is  the  relation  of  working  capital  to 
total  capital.  An  examination  of  important  corpora- 
tions shows  a  wide  variation  in  percentage.  The  fol- 
lowing table  illustrates  the  point: 

Ratio  of  Working  Capital  to  Total  Capital 
IN  Selected  Corporations* 

*Cuba  Cane  Sugar  Company 3    % 

California  Petroleum  Corporation   3.9% 

American  Ice  Company 8.9% 

Pittsburgh  Coal  Company 10.7% 

*Railway  Steel  Spring  Comjxmy 11-3% 

*Mexican  Petroleum  Company 12.3% 

New  York  Air  Brake  Comixmy 13.4:% 

American  Writing  Paper  Company 15.1% 

*American  Linseed  Company 17.1% 

*Based  upon  1918  fijuires — Moody's  Manual.     All  others  based  on 
1919  statements  in  Moody's  Manual,  1920. 


538        PROBLEMS  IN  SALES  MANAGEMENT 

G(Mi(M-al  Choinical  Company 17.2% 

United  Fruit  Company 17.3% 

Pressed  Steel  ( 'ar  Company 17.8% 

Ameriean  Cyanamid  ('ompany 17.9% 

United  States  Steel  Corporation 21.8% 

Lackawanna  Steel  Company 22.3% 

Aeolin  Weber  Piano  and  Pianola  Company 23.4% 

F.  W.  Woohvorth  Company 23.4% 

National  Biscuit  Company 23.9% 

Loose- Wiles  Biscuit  Company 25.3% 

American  Fal)rics  Company 27.2% 

Kresge  Company 27.2% 

American  Chicle  Company 27.8% 

Sears,  Roebuck  Company 27.9% 

National  Lead  Company 30.1% 

Cambria  Steel  Company 30.4% 

Morrison  Company 30.8% 

American  Sugar  Refining  Company 30.9% 

American  Hide  and  Leather  Company 31.8% 

United  Shoe  Machinery 34.1% 

American  Steel  Foundries 34.3% 

Garfield  Worsted  Mills 35.1% 

Armour  and  Company 35.3% 

Crex  Carpet  Company 35.4% 

Swift  and  Company 36.8% 

Baldwin  Locomotive  Works 37.4% 

American  Tobacco  Company .38.4% 

Underwood  Typewriter  Company 38.9% 

Arlington  Mills 39.5% 

Deere  and  Company 41.7% 

United  States  Rubber  Company 42.2% 

Eastern  Manufacturing  Company 43.5% 

American  Woolen  Company 44.4% 

Westinghouse  Air  Brake  Company 44.4% 

Diamond  Match  Compan}^ 46.5% 

Kellev-Springfield  Tire  Company 48.5% 

Saco-Lowell  Mills 51.7% 

International  Harvester  Company 58.6% 

Central  Leather  Company 64.4% 

Question 
To  what  extent  is  this  variation  in  ratio  due  to  sales 
policies  and  sales  methods? 


FINANCING  OF  SALES  539 

Problem  306 
Relation  of  Sales  Methods  to  Operating  Ratio 

An  index  of  efficiency  which  has  been  used  particular- 
ly in  connection  with  railroads  is  the  operating  ratio; 
that  is,  the  percentage  of  total  expense  of  running  the 
business  (including  manufacturing,  selling,  and  admin- 
istration) to  the  gross  sales.  The  gross  profit  on  sales 
is  evidently  represented  by  the  difference  between 
100%,  representing  gross  sales,  and  the  operating  ratio. 
The  application  of  this  test  to  certain  industrials  brings 
the  following  results: 

TOTAL    EXPENSE 

RATIO  1.  = 

GROSS  EARNINGS 

*Mexican  Petroleum  Company ,  55.6% 

*Railway  Steel  Spring  Company 66.3% 

American  Fabrics  Company 69.2% 

California  Petroleum  Company 72.4% 

Garfield  Worsted  Mills 77.4% 

American  Cyanamid  Company 77.5% 

*Lackawanna  Steel  Company 78.1% 

*New  York  Air  Brake  Company 78.3% 

American  Steel  Foundries 78.6% 

American  Ice  Compan}^ 84.7% 

United  States  Steel  Corporation 87.2% 

Pittsburgh  Coal  Company 87.7% 

Central  Leather  Com])any 88.  % 

American  Tobacco  Company 88.9% 

Arlington  Mills 89.  % 

Sears,  Roelnick  Company •. ' 89.3% 

American  Hide  and  Leather  Company 90.2% 

F.  W.  Woolworth  Company 91.4% 

United  States  Rubber  Company 92.1% 

Eastern  Manufacturing  Company 92.5% 

American  Express  Company 92.9% 

Cuba  Cane  Sugar  Company 93.  % 

Baldwin  Locomotive  Works 94.5% 

Kresge  Company 94.7% 

1.  In  expense  has  been  included  the  operating,  administrative,  and 
selling  expense  including  depreciation,  interest,  and  taxes.  No  uniform 
method  of  reporting  financial  statements  has  been  adopted,  so  that 
interpretation  had  to  be  resorted  to  in  many  cases.  The  ratios  may 
be  taken  as  only  approximately  correct. 

*Based  upon  1918  figures — Moody's  Manual.  All  others  based  on 
1919  statements — Moody's  Manual,  1920. 


540        rH()HlJ:MS  1\  SALES  MANAGEMENT 

Armour  and  C'ompauy 90.1% 

Aincrican  Writing;  Papci-  Coiupauy 97.3% 

Pressed  Steel  Car  Coinpanv 97.5% 

Swift  and  C'onipany 98.9% 

Qucslioii 
To  what  extent  do  sales  jjolieies  and  sales  methods 
affect  the  operating  ratio'.* 


Problem  307 
Prepaying  Frekjht  to  Branch  Houses 

The  Randolph-Wellburn  Company  is  engaged  in  the 
manufacture  of  hand,  circular  and  band  saws,  machine 
knives,  files,  and  a  few  specialties  such  as  cigar  cutters. 
The  number  of  styles  in  the  company's  line  reaches  an 
aggregate  of  approximately  30,000  numbers.  The 
product  is  distributed  through  seven  branches  located 
at  New  York,  Pittsburgh,  New  Orleans,  Portland 
(Oregon),  San  Francisco,  St.  Louis,  and  Memphis. 
The  company's  main  office  is  at  Worcester,  where  it 
has  two  factories.  It  also  operates  a  factory  in 
Chicago,  and  a  steel  mill  at  Buffalo. 

The  branches  sell  direct  to  retail  stores  and  also  to 
the  larger  consumers  of  the  Randolph-Well})urn  Com- 
pany's product.  The  salesmen  that  call  upon  the 
individual  consumers  also  carry  a  line  of  mill  supplies 
which  are  purchased  direct  from  manufacturers  and 
carried  in  stock  by  each  branch  house. 

The  home  office  sells  to  the  branch  offices  at  whole- 
sale prices,  and  the  branches  function  as  separate 
wholesale  establishments.  They  are  expected  to  show 
a  profit.  Their  retail  selling  price,  however,  is  fixed  by 
the  home  office  by  so-called  list  prices  which  are  pre- 
sented in  catalog  form.     Because  of  lower  freight  rates 


FINANCING  OF  SALES  541 

and  keener  competition  in  the  East,  the  branches 
located  in  that  section  of  the  country  are  allowed  to 
give  larger  trade  discount  than  the  branches  on  the 
Pacific  coast. 

The  accounting  for  these  branches  is  all  done  at  the 
home  office,  each  branch  having  but  one  bookkeeper. 
The  home  office  sends  to  each  branch  one  check  to 
cover  the  monthly  payroll.  Each  branch  is  allowed 
a  petty  cash  account  varying  from  $500  to  $3,000, 
depending  upon  the  size  of  the  branch,  and  from  this 
account  all  petty  cash  expenses  are  met  for  bills  that 
amount  to  less  than  $100.  All  bills  amounting  to 
more  than  $100,  except  rent,  are  approved  by  the 
branch  office  managers  and  forwarded  to  the  home 
office  for  payment. 

In  the  fall  of  1920,  the  general  sales  manager  made  a 
careful  study  of  freight  charges  from  the  factory  to  the 
different  branches.  He  found  that  the  charges  for  the 
eastern  branches  averaged  2%  of  the  list  selling  price 
of  the  products  as  published  in  the  company's  catalog, 
and  for  the  western  branches,  5%  of  the  list  prices. 
As  a  result  of  this  investigation  the  general  sales 
manager  recommended  that  the  home  office  pay  all 
freight  on  shipments  from  the  factory  to  the  branches, 
and  that  a  flat  rate  of  2%  to  the  eastern  branches  and 
5%  to  the  western  branches  be  added  to  the  wholesale 
prices  of  the  different  products  sold  to  the  branches. 
All  lines  purchased  from  other  manufacturers,  such  as 
mill  supplies,  would  be  paid  for  by  each  branch  house 
as  had  been  done  in  the  past. 

Question 
Should  the  sales  manager's  recommendation  have 
been  adopted? 


:.42    PKOBLKMS  IN  SALES  MANAGEMENT 

PUOBLEM    308 

Trade  Acceptances 

The  treasurer  of  a  hirse  corporation,  which  refines 
and  sells  various  metals,  writes  regarding  the  use  of 
acceptances  and  t(M-ins  of  sale: 

The  general  I'ule  is  to  draw  "si^ht"  or  "aiTivai"  draft.^  on 
the  customer  with  hill  of  lading  attached.  There  are  many 
exceptions  to  this  rule,  hut  payment  is  expected  and  received 
in  "10  days  from  date  of  shipment,"  "30  days  from  date  of 
shipment"  or  on  *tlic  arrival  of  the  merchandise." 

As  a  rule,  there  is  no  such  thing  as  "open  account  business," 
for  usually  metals  are  shipped  on  "order"  hills  of  lading,  so 
that  we  retain  control  until  payment  is  made. 

In  the  few  cases  when  we  have  used  trade  acceptances, 
there  has  been  a  special  reason  for  so  doing.  Generally,  the 
customer  has  requested  this  procedure  and  we  have  been 
willing  to  meet  his  wishes.  The  very  limited  experience 
which  we  have  had  with  trade  acceptances  has  been  satis- 
factory. 

We  have  given  some  consideration  to  the  feasibility  of 
drawing  on  our  customers  at  the  time  when  their  orders 
have  been  placed,  when  they  call  for  future  shipments;  but 
this  has  never  been  put  into  practice.  If  it  were  done,  it 
would  be  simply  a  matter  of  facilitating  our  own  financing, 
and  we  have  never  been  in  a  position  to  need  to  adopt  this 
method. 

My  own  feeling  regarding  these  trade  acceptances  is  that 
this  instrument  is  useful  onl}'  where  cash  discounts  are 
offered  and  not  taken.  A  concern,  which  does  not  take  cash 
discounts,  is  financing  itself  in  a  very  expensive  way  and  its 
credit  position  is  open  to  considerable  question. 

I  believe  that  the  trade  acceptances  serve  many  good 
purposes,  but  I  hope  we  shall  not  see  the  time  when  they 
will  be  generally  adopted  in  the  wholesale  metal  business. 
The  bank  acceptance  is  a  far  superior  instrument  and  it  can 
and  should  be  made  to  serve  in  many  cases  where  the  trade 
acceptance  is  now  used. 

Again,  I  am  speaking  from  the  point  of  view  of  wholesale 
business  where  individual  sales  rvm  almost  entirely  to  very 
large  figures.  To  a  very  large  extent,  however,  the  same 
applies  to  smaller  transactions. 

Any  customer  is  closer  to  his  own  l)ank  than  he  can 
possibly  be  to  his  supplier.  He  should  finance  himself 
according  to  the  means  at  his  disposal  locally  and  not  place 


FINANCING  OF  SALES  543 

this  burden  on  his  supplier.  Obviously,  when  we  are  in  a 
"buyer's  market,"  the  buyer  can  assert  his  advantage  and 
force  his  supplier  to  meet  his  wishes. 

Question 
Is  the  validity  of  this  argument  confined  to   the 
wholesale  metal  business? 


On  the  other  hand,  a  manufacturer  of  machinery 
and  tools,  whose  goods  are  sold  throughout  the  United 
States  and  in  foreign  countries,  has  used  the  trade 
acceptance  in  his  business  ever  since  the  plan  was 
inaugurated  and  claims  to  have  done  everything  in 
his  power  to  encourage  its  use  with  customers. 
According  to  his  statement: 

We  sell  to  various  trades  in  this  country,  including  con- 
sumers, dealers,  jobbers,  manufacturers,  railroads  and 
governments,  together  with  a  large  foreign  trade;  conse- 
ciuently,  conditions  necessarily^  differ  in  the  terms  that  we 
use  affecting  these  different  trades.  Our  regular  terms  are 
net  thirty  daj's  on  open  account  and  we  do  not  offer  cash 
discounts.  We  use  trade  acceptances  largely  with  our 
machinery  sales  and  believe  that  this  form  of  settlement  fits 
in  very  conveniently  with  a  machinery  business. 

In  order  to  encourage  the  development  of  trade  accep- 
tances with  our  trade,  we  have  allowed  slightly  longer  time 
when  trade  acceptances  are  given  and  we  generally  draw  on 
a  forty-five  day  basis.  We  feel,  however,  that  when  a 
customer  pays  very  promptly  within  thirt}^  days,  there  is 
no  real  advantage  in  a  trade  acceptance  and  that  the  latter 
form  works  out  better  on  a  sixty  or  ninety-day  basis.  We 
have  always  maintained  very  close  terms,  and  for  that 
reason  we  limit  the  time  we  offer  on  an  acceptance  basis  to 
forty-five  days. 

During  the  past  year  we  have  handled  over  one  thousand 
different  transactions  on  an  acceptance  basis,  which  repre- 
sents approximately  66%  of  the  number  of  acceptances  that 
we  submitted  with  invoices  to  our  customers  for  acceptance, 


r)44      pi;()HLi:.Ms  i.\  salI'Is  maxa(;i<:mknt 

and  wliicli  also  will  represent  ahoiil  the  same  percentage  in 
the  anioiiiil  in  dollars  and  cents;  and  which  is  aljout  25% 
of  our  total  sales  the  lattei'  constit  ut  inji  several  million 
dollai's;  oi',  in  oilier  woids,  one-lhinl  of  acceptances  retui'ned 
as  declined. 

We  find  that  our  customei's  are  ^raduall>'  hecomins  more 
fav()ral)le  to  the  use  of  trade  acceptances  and  \\v  have  very 
little  difliculty  at  the  jiresent  time  in  oljttiininfz;  the  return 
acceptance  duly  signed.  'Inhere  are  certain  concerns,  of 
coui-se,  that  will  not  use  them  owin^  to  their  accounting 
methods  and  others  thnjugh  a  misunderstanding  feel  that 
it  is  a  reflection  on  their  credit.  We  alvvavs  explain,  in  such 
cases,  that  giving  acceptances  is  a  favoral)le  indication  of  the 
standing  of  a  concern  and  we  considei'  such  customers  very 
desiiahle. 

We  believ(>  the  trade  acceptance  has  come  to  sta}'  and 
that  eventually  it  will  become  more  in  use  and  that  manj  ol 
the  objections  that  are  now  raised  against  them  will  dis- 
appear. We  also  have  encouraged  a  market  for  acceptances 
with  our  local  banks  by  offering  them  for  sale  and  we  find 
that  our  local  banking  institutions  are  gradually  becoming 
favorable  to  them  as  an  investment  and  eagerh'  seek  them. 

Questions 

1.  Should  the  wholesale  dry  goods  concern  described 
in  Problem  309  use  trade  acceptances? 

2.  The  Automotive  Sales  Company  of  Problem  325? 


Pkoblk.m  309 
Terms  of  Sale 

The  Roanoke  Wholesale  Dry  Goods  Company,  of 
New  York,  a  large  concern  specializing  on  piece  goods, 
covers  the  entire  United  States  in  its  distribution. 
Purchases  of  this  company  have  for  years  been  limited 
largely  to  a  few  firms  acting  as  selling  agents  for 
northern  and  southern  mills. 

The  financing  of  the  Roanoke  Company  and  the 
general  methods  of  doing  business  are  greatly  affected 


FINANCING  OF  SALES  545 

by  the  terms  of  sale  which  it  procures  from  the  textile 
agents.  Prior  to  the  war,  the  terms  obtained  on 
season,  finished  cotton  goods  were  usually  2%-10  days 
with  season  datings  of  April  1  and  October  1.  On 
staples  and  season  goods  purchased  between  seasons 
the  terms  were  2%-10  days,  60  days  extra.  Anticipa- 
tion was  usually  permitted  at  the  rate  of  6%  per 
annum.  These  terms  applied  to  the  greater  variety 
of  goods,  though  certain  products  bore  other  terms 
than  these.  On  woolen  and  worsted  piece  goods  the 
terms  allowed  were  uniformly  10%- 10,  9%-30,  8%-60, 
7%-4  months,  with  season  datings  of  June  30  and 
December  31.  In  this  case  the  season  dating  did  not 
lengthen  the  terms  as  much  as  it  would  seem  to,  for 
dehveries  wei-e  not  made  immediately  after  the  mill's 
selling  season,  but  rather  were  adjusted  to  the  Roanoke 
Company's  needs.  Anticipation  was  generally  per- 
mitted at  6%  per  annum. 

During  the  war  and  for  some  time  afterwards  the 
terms  of  sale  were  materially  shortened  on  cotton 
goods;  post  datings  were  eliminated.  Upon  the 
woolen  goods  and  worsteds  the  terms  were  reduced  to 
net-10,  or  net-30  days,  e.  o.  m. 

Mr.  James  E.  Pennock,  president  of  the  Roanoke 
Company,  instructed  his  buyers  in  making  their  pur- 
chases for  the  spring  season  of  1921  to  accept  only  those 
terms  which  the  company  had  always  been  getting 
prior  to  the  war. 

Questions 

1.  Should  the  agents  have  granted  the  request 
made  upon  them? 

2.  What  would  have  been  the  effect  of  a  general 
lengthening  of  the  terms  by  the  selling  agents  upon 
the  business  operations  of 

(a)  The  selling  agents. 
(6)  The  Roanoke  Company. 
(c)   Small  jobbers. 
{d)  Retailers. 

3.  Why  were  terms  shortened  in  these  lines  during 
the  war  period? 


546       PROBLEMS  IN  SALES  MANAGEMENT 

PUOBLEM    310 

Interest  Charged  on  Past-Due  Accounts 

Hopkins,  Silt  cliff  &  Coiiipany  is  ;i  scirni<;  organization, 
(listrihutiiij;  cotton  piece  {roods.  The  conijnxny  sells 
tlie  i)roiluct  of  tliree  factories  which  it  owns  and  con- 
trols; in  addition,  it  handles  the  sales  of  five  other 
cotton-inamifacturinfi;  C()nii)anies.  The  company  dis- 
tributes all  its  lines  direct  to  jobbers. 

On  January  1,  1920,  it  had  standardized  the  cash 
discount  offered  and  |)laced  it  on  a  2-10-GO  basis. 
in  other  words,  bills  paid  within  10  days  received  a 
2%  cash  discount;  the  net  terms  were  really  70  days. 
It  allowed  6%  interest  on  all  prepayments.  For 
the  10  years  previous,  this  company,  in  cooperation 
with  the  other  leading  selling  organizations  of  piece 
goods,  has  endeavored  to  eliminate  the  so-called  inside 
prices  that  have  been  offered.  During  the  war  the  seller's 
market  that  existed  enabled  them  to  standardize  terms 
as  outlined  above. 

Mr.  Malcolm  McDonald,  senior  salesman  of  Hop- 
kins, Sutcliff  &  Company,  on  October  1,  1920,  found 
that  one  of  their  large  competitors  was  charging  6% 
interest  on  bills  that  were  not  paid  within  70  days 
of  dating.  This  his  company  had  not  been  doing,  as 
it  believed  in  cases  where  a  bill  was  overdue  that  the 
main  endeavor  should  be  to  get  the  bill  paid  and  then 
consider  whether  or  not  it  should  continue  to  sell  such 
a  retailer. 

Question 

Should  Hopkins,  Sutcliff  &  Company  have  charged 
interest  at  the  rate  of  0%  on  all  bills  not  paid  within 
70  days  of  dating? 


FINANCING  OF  SALES  547 

Problem  311 
Handling  Credits 

(a)  The  following  instructions  were  addressed  re- 
cently by  a  credit  manager  "to  all  employees  of  the 
credit  office."* 

All  accounts  thirt}'  clays  past  due  amounting  to  $500 
or  more  are  to  be  referred  to  the  credit  manager. 

Reopened  accounts  and  new  accounts  due  to  changed 
business  conditions  throughout  the  world  nmst  be  con- 
sidered under  the  same  category.  All  such  accounts  should 
receive  attention  in  the  following  manner: 

Discover  "the  motive  of  the  order" ;  that  is,  whj-  the  order 
was  tendered,  was  it  the  result  of  salesmanship,  good-will  or 
advertising?  If  convinced  that  the  order  came  in  the  natural 
course  of  business,  proceed  to  gather  credit  data  as  usual. 

Financial  statements  must  reveal  from  your  analysis 
whether  there  has  been  an  over-investment  of  funds  in 
buildings,  steel  and  merchandise. 

Furthermore,  the  credit  office  must  know  definitely 
whether  the  merchandise  values  as  they  appear  in  the  state- 
ments are  taken  at  prices  in  conformity  with  the  best  prac- 
tice, which  is  market  price  if  lower  than  cost  price,  cost  price 
if  cost  is  lower  than  market. 

Inasmuch  as  approximatelv  every  business  house  in  the 
country  has  a  largely  increased  overhead  which  includes 
wages,  salaries,  taxes,  telephone,  upkeep  of  new  buildings, 
etc.,  it  shall  be  the  practice  of  this  office  from  this  date, 
before  extending  any  considerable  new  credit  to  old  customers 
or  credit  to  new  customers,  to  learn  and  know  definitely. 

Whether  or  not  the  customer  has  trinnned  his  pay  roll, 
curtailed  his  overhead,  and  brought  within  reasonable 
bounds  his  entire  expenditures  so  that  his  loss  if  any  for  the 
ensuing  year  will  be  minimized.  Our  investigators  should 
take  nothing  for  granted. 

Inasmuch  as  up-to-date  credit  information  is  valuable  in 
determining  the  quality  of  a  credit  applicant,  it  shall  be  the 
policy  hereafter. 

To  use  more  liberally  the  int(>rchange  bureaus  through- 
out the  country',  so  that  instantaneous  reports  of  customers' 
present  indebtedness  may  be  known.  If  ever  up-to-date  in- 
formation was  worth  anything,  it  is  worth  far  more  to-day. 

Newspapers  and  trade  papers  are  filled  with  news  items 
concerning  the  financial  affairs  of  many  of  our  customers. 

*Pnnt€rs'  Ink,  April  21,  1921. 


54S        PROBLEMS  IN  SALES  MANAGEMENT 

Sonic  spciik  of  rcduci'il  i)ii\  rolls,  shutting  down  of  plants, 
working  part  time,  reorganizations,  extensions,  receiverships, 
etc.     The  clipping  department   is  therefore  urged: 

To  follow  more  closely  its  woi'k  and  incorporate  the 
clippings  in  tiie  commercial  report  folder;  further 

In  order  that  an  intelligent  understanding  of  the  cus- 
tomers' advertising  methods  niay  be  available,  it  is  requested 
that  advertising  in  the  trade  papers  and  newspapers  showing 
the  class  of  goods  offered  for  sale  ho  attached  and  made 
part  of  the  conunercial  report. 

It  has  been  the  practice  of  this  office  to  record  on  cards, 
folders,  etc..  data  concerning  the  credit  resi)onsil)ility  of  our 
customers.  In  order  to  prevent  any  possibility  of  errors  of 
judgment,  it  shall  be  the  practice  of  the  office  hereafter: 

To  present  only  the  original  information  for  considera- 
tion, so  that  a  decision  may  be  made  with  that  in  full  view; 
and  it  follows  that  orders  are  to  be  certified  as  to  credit  with 
the  Commercial  Report  Folder,  the  Customer's  Ledger  Sheet 
and  the  Collection  Correspondence;  also  in  full  view  when 
the  judgment  whether  to  ship  or  not  to  ship  is  being  made. 

Questio?i 
Are  the  instructions  here  given  applicable  only  to 
periods  of  uncertainty  and  depression? 


(6)  A  large  order  has  been  received  by  a  producer 
of  condensed  milk  from  a  wholesale  grocery  concern 
operating  a  chain  of  12  wholesale  grocery  stores. 
The  financial  statement  of  the  company  as  of  July  1, 
1921,  seems  to  warrant  granting  the  credit  requested, 
though  there  was  some  doubt  as  to  the  item  of  receiva- 
bles. It  was  suggested  to  the  credit  manager  that  the 
record  of  collections  and  outstandings  might  be  of  ser- 
vice. It  is  learned  upon  inquiry  that  the  outstandings 
of  the  various  houses  in  the  chain  were  as  follows  on 
July  1,  1921,  as  compared  to  July  1,  1920: 


FINANCING  OF  SALES  549 

1  2  3  4  5  6  7  8  9  10  11  12 

July  1,  1920 Per  cent,  28  33  45  49  52  55  60  63  64  65  68  101 

July  1,  1921 Per  cent  40  40  46  53  55  60  63  66  78  79  71  90 

Question 
Does    this   record    assist    the   Credit    Manager    in 
deciding  upon  the  credit  application? 


Problem  312 
Handling  Credit    Applications 

The  Oakdale  Wholesale  Grocery  Company,  located 
in  New  York  State,  had  for  the  most  part  confined  its 
efforts  to  selling  to  retail  stores  in  cities  of  150,000  or 
over  in  the  surrounding  territory.  During  the  latter 
part  of  1918  the  executives  of  the  company  decided  that 
it  would  be  advisable  to  spread  out  and  distribute  their 
product  in  the  smaller  cities.  Accordingly,  the  sales 
districts  were  reorganized  and  new  salesmen  were 
taken  on. 

F.  G.  Barker,  one  of  the  new  salesmen,  on  Jan- 
uary 10,  1919,  sent  in  an  order  for  $500  which  he  had 
received  from  a  retail  grocer  in  a  town  of  8,000  popula- 
tion in  the  northern  part  of  New  York.  This  was  the 
first  order  that  had  been  received  from  Mr.  Barker,  and 
the  retail  account  was  a  new  one  for  the  Oakdale  Whole- 
sale Grocery  Company.  The  following  statement  was 
submitted  by  Mr.  Barker  with  the  order. 

Financial  Statement,  Year  Ending  December  31,  1918 

Assets  Liabilities 

Cash  on  hand $    425.17  Accounts  Payable  .  $2,805.31 

Accounts  Receivable  5,910.03     Bills  Payable 19,321.19 

Merch.  Inventory.  .16,221.41 

Equipment  Inv'tory  1,003.20     Balance 1,433.31 

$23,559.81  $23,559.81 


5r)()      i'i;()I'.i.i;ms  in  sai.i:s  .maxa(;i;mi-:nt 

Mr.  P);iik('r  fcijoi-tcd  tliat  the  iiiimial  sal('s  of  this 
retail  <;r()('('r  were  ai)()iit  STO. ()()()  and  that  lie  ostiniatod 
the  retailer  took  ai)i)ro\iiiiately  one-foiulh  of  the  easli 
discounts  olTei'ed  him.  He  icpoited  that  so  far  as  he 
was  ahle  to  (iiid  out  the  retailer  was  huyinp;  from  about 
eight  wholesale  };"1'o('(M"s  and  makiuj^  occasional  scattered 
purchases  from  a  few  others,  that  a))i)roximat(^ly  6% 
of  the  ])usiuess  was  on  a  credit  hasis,  and  that  the  stock- 
turn  amounted  to  about  'A.S  times  a  year.  He  stated 
that  the  gross  profit  of  \\\v  comj^any  was  in  the  neigh- 
borhood of  \7^'l  and  the  total  expense  14.5%  for  the 
year  19bS.  The  town  in  which  this  store  is  located  is 
in  a  prosperous  district,  and  the  owner  has  a  high 
standing  among  the  merchants  in  the  town. 

Quesiio)) 
Should  this  sale  have  been  approved? 


Problem  313 

Financing  Sales  of  Automobiles 

In  the  automobile  trade  there  has  been  a  general 
tendency  on  the  part  of  manufacturers  to  dispense  with 
jobbers  and  to  build  their  sales  organizations  more  or 
less  on  the  basis  of  selling  contracts  with  automobile 
dealers.  In  this  way,  manufacturers  are  able  to  main- 
tain control  oxer  the  source  of  outlet  for  their  products. 
Dealers  are  gi\'en  selling  agreement  covering  stipulated 
territory.  They  are  required  to  execute  a  contract 
based  as  accurately  as  possible  on  the  potential  busi- 
ness in  their  territoiy,  and  to  purchase  a  certain 
number  of  cars  a  year.  The  contract  figures  vary  from 
a  few  cars  to  several  hundred.  Discounts  vary  with 
the  number  of  cars,  a  dealer  contracting  for  100  cars 
having  the  advantage  of  a  larger  discount  than  the 
dealer  who  sells  onl}^  25  cars  a  year. 


FINANCING  OF  SALES  551 

On  the  basis  of  prevailing  terms  the  automobile 
dealer  must  pay  cash  for  the  oars  when  they  are 
delivered  to  him;  and  with  his  knowledge  of  potential 
business,  the  dealer  is  able  to  estimate  the  amount  of 
capital  he  will  rec^uire  to  finance  the  ])urchase  of  cars 
to  fill  his  selling  contract.  Since  manufacturers  load 
their  product  f.  o.  b.  factory  in  most  instances,  con- 
siderable capital  may  be  required  for  one  shi]:)ment  of 
cars  plus  loading  or  decking  charges  and  taxes,  and  less 
the  stipulated  discount.  In  the  majority  of  cases  the 
dealer  is  either  unable  or  unwilling  to  finance  his  entire 
sales  unaided  by  outside  capital.  His  problem  is, 
therefore,  to  get  the  necessary  capital  upon  the  best 
possible  terms.  Local  bankers  are  very  often  the 
source  of  this  capital. 

There  are  times  when  bankers  cannot  finance  auto- 
mobile dealers  or  there  are  times  when  they  refuse  to 
do  it  for  reasons  that  reflect  in  no  way  upon  the  dealer 
as  a  credit  risk.  At  such  times  the  dealer  Ynay  occa- 
sionally turn  to  finance  corporations  formed  primarily 
for  the  purpose  of  financing  the  automobile  trade,  both 
in  sales  to  consumers  and  purchases  by  dealers.  These 
finance  corporations  ordinarily  loan  funds  to  dealers  and 
through  dealers  to  users  upon  the  basis  of  conditional 
sales  or  warehouse  certificates  at  rates  commonly 
higher  than  the  prevaihng  interest  rate. 

The  General  Motors  Corporation  has  its  own  sub- 
sidiary acceptance  corporation.  Just  as  it  finances  the 
purchase  of  cars  to  purchasers  at  retail,  the  General 
Motors  Acceptance  Corporation  assists  dealers  to  pur- 
chase wholesale  stocks.  This  assistance  may  be  given 
in  two  forms :  The  dealer  may  secure  control  of  the  cars 
he  purchases  and  display  them  on  his  own  account;  or 
he  may  store  them  in  a  licensed  warehouse  under 
pledged  receipts,  but  before  he  can  sell  any  car  in  the 
shipment,  he  must  make  payment  to  the  full  amount 
of  credit  on  that  particular  car  to  the  bank  appointed 
to  handle  the  matter  for  the  General  Motors  Accep- 
tance Corporation.     Here  is  the  plan  as  outlined : 


ri^olU.IOMS  IN  SALES  MANAGEMENT 


Tkums  and  Hatks 
M;ixiiiniiii  Tiiiio  Six  Moiill 


WluTc  Motor 

( "ash 

Amount 

Perfor- 

N'cliiclcs arc 

Down 

l'"inaiic('d 

( 'harge* 

mance 

Sidicil 

Payment 

Bonus 

Public 

10%  of 

00%  of 

1/30    of     1% 

1/30  of  l%of 

Licensed 

Invoice 

I  nvoicc 

of  amount  for 

amount    paid 

\Var(>lioiisc 

Price 

Price 

each  day  ac- 
commodation 
is  used  (1% 
per  month).* 

before  matur- 
ity   for    each 
day    accom- 
modation  is 
not  used. 

Consignee's 

15%  of 

85%  of 

1/30    of    1% 

»       u       u 

Floor  or 

Invoice 

Invoice 

of  amount  for 

Under  His 

Price 

Price 

each  day  ac- 

Control 

commodation 
is  used  ( 1  % 
per  month), 
plus  initial 
charge  of  1%* 

*Charge  includes: 
Interest  to  Maturity. 

Fire  and  Transportation  Insurance  for  Consignee's  Full  Price  of  Cars. 
Trade  Acceptances  and  Notes  must  be  drawn  for  integral  months. 
Bank's  Fee. 
Fidelity  Bond. 
Exchange  Charges. 

Invoice  Price: 

Includes  consignee's  price  of  car,  taxes;  extras,  if  desired;  freight,  if 
prepaid  by  shipper.  If  freight  is  paid  to  railroad  by  con-signee  and  is 
equal  to  or  more  than.the  required  cash-down  payment,  arrangements 
can  be  made  with  G.  M.  A.  C.  to  consider  the  freight  disbursement  as 
the  required  cash-down  payment,  making  amount  financed  the  net 
invoice  price  of  the  vehicles. 

The  maximum  time  for  this  financing  is  six  months. 
This  is  allowed  only  during  that  part  of  the  year 
covered  by  the  winter  months.  The  effect  of  limiting 
the  time  is  to  insure,  as  far  as  possible,  that  the  dealer 
will  make  every  effort  to  dispose  of  his  cars  within  the 
time  hmit. 

Questions 
Could  this  plan  be  used  successfully  by  a  manufac- 
turer of 

(a)  Phonographs; 
(6)  Pianos; 

(c)  Electric  washing  machines; 

(d)  Household  furnaces? 


FINANCING  OF  SALES  553 

Problem  314 
Deferred  Payment  Plan 

The  Shepley  Company  (see  Problem  Nmnber  161) 
issued  the  following  announcement  January  1,  1921: 

The  Shepley  Company,  aware  of  the  unusual  conditions 
now  obtaining,  presents  a  deferred  payment  phm  to  pros- 
pective purchasers,  both  dealer  and  user,  on  the  basis  of 
approximate!}^  one-third  cash  and  the  balance  evidenced  by 
notes  under  the  following  conditions: 

Note  signed  by  dealer  is  to  cover  specific  tractor,  identi- 
fied by  serial  number  and  is  to  be  in  uniform  amount  of 
SI,  100.00  on  each  XY  model  and  is  to  mature  six  months 
from  date  of  shipment.  The  balance  of  purchase  price  to 
be  paid  in  cash  and  variations  in  the  cash  payment  will  arise 
through  graduation  of  discounts  based  on  quantity. 

Dealer: 

(Example) 

Retail  price  XY  tractor  f.  o.  b.  Factory S2, 150.00 

Dealer's  net  cost  allowing  20%  discount 1,720.00 

Cash  from  Dealer $    620.00 

Note 1,100.00 

Sl,720.00 

The  deferred  payments  of  user  shall  be  evidenced  by 
two  notes,  preferably  for  equal  amounts,  and  recom- 
mended by  the  bank  at  which  the  notes  are  payable, 
the  last  of  which  shall  mature  not  later  than  10  months. 

User: 

(Example) 

Retail  price  XY  tractor  f.  o.  b.  Factorv $2,150.00 

Cash  from  User $    850.00 

1st  note 650.00 

2d  note 650.00 

$2,150.00 
The  Dealer  will  be  furnished  forms  of  note  to  be  signed  by 
the  user  in  favor  of  the  dealer,  which  are  then  to  be  endorsed 
by  the  dealer  to  the  Company. 

It  will  be  observed  in  the  above  example  that  notes  on 
XY  tractor  will  never  total  an  amount  exceeding  $1,300.00. 
This  maximum  amount  is  $200.00  in  excess  of  the  dealer's 
note  held  by  the  Company  and  represents  part  of  the  dealer's 
commission  which  remains  unpaid  until  the  user's  notes  are 
paid  in  full  as  assurance  that  dealer  will  not  lose  interest  in 
their  collection. 


504        PKOliLllMS   l.\   SALKS  AlANACilO.MKNT 

Receipt  by  the  ( "oinpauy  of  user's  notes  endorsed  l)y  the 
dealer  will  autoiuatically  cancel  dealer's  note  to  the  Company 
on  the  same  tractor,  which  will  he  returned  to  the  dealer 
together  with  "a  commission  credit  cei'tificate''  in  the  amount 
of  S2()().()()  due  when  usei's  notes  are  paid.  At  the  same  time 
user's  first  note  is  paid  in  full,  includinji  interest,  dealer  will 
receive  a  check  from  the  Comi^any  for  SIOO.OO  with  interest. 
The  same  procedure  will  i)e  followed  when  user's  second  note 
is  paid  in  full,  which  transaction  will  complete  payment  of 
dealer's  full  commission. 

Notes  sij^ned  l)y  dealer,  as  well  as  notes  sijined  l)y  user, 
are  to  bear  the  current  rate  of  interest  in  the  respective  states 
and  are  to  mature  at  dates  dictated  l)y  individual  circum- 
stances, liut  not  to  exceed  the  maximum  period  as  stated 
above. 

Questions 

1.  What  are  the  advantages  and  disadvantages  of 
this  deferred  payment  plan 

(a)  For  the  company ; 

(b)  For  the  dealer? 

2.  Under  what  conditions  can  and  should  a  com- 
pany adopt  such  a  plan? 


Problem  315 
Financing  S.\les  or  Motor  Trucks 

The  Carter  Motor  Truck  Company  produces  and 
sells  through  wholesale  and  retail  dealers  a  line  of  1-, 
2-,  and  3-ton  trucks  which  are  equipped  with  standard 
bodies  of  the  type  most  used  by  farmers.  Its  prod- 
uct for  the  past  few  years  has  been  sold  almost 
entirely  to  farmers  through  local  dealers,  who  also 
handle  implements.  With  increased  production  the 
company  realizes  that  it  must  make  arrangements  or 
help   to  make  arrangements  to  finance   dealers  and 


FINANCING  OF  SALES 


555 


farmers  who  wish  to  buy  trucks.  With  a  small 
number  in  each  district  it  was  possible  to  finance  sales 
by  the  usual  method  of  using  working  capital  and  bank 
credit.  Now,  however,  it  seems  that  the  manufacturer 
must  extend  credit  and  use  his  own  resources  to  the 
Hmit  if  he  is  to  dispose  of  his  product  in  the  course  of 
the  season.  For  dealers  who  have  territory  in  rural 
districts  the  following  plan  has  been  devised  whereby 
the  dealers  may  take  the  time-payment  contracts 
given  by  users  and  turn  them  in  to  the  Carter  Motor 
Truck  Company,  which  will  therel)y  finance  the  dealer: 


Cla.ss 

of 

Car 

rvlaximuni 

Amount  of 

Note 

Deferred 
Balance 
Payable 

Rate  for  Computing 

Differential  Based  on 

Amount  Financed 

New 
or 

used 
trucks 

60%  of  Cash  S.  P. 
60%  of  Cash  S.  P. 

50%  of  Cash  S.  P. 

3  ■>— 4  Mo. 
M— 8  Mo. 

1^—3  Mo. 
1.^—6  Mo. 
H— 9  Mo. 

One  Note— 7 
Mo. 

7%  of  amount  financed. 
1%  of  amount  financed. 

2%   1st  month  and   1%, 
each  additional  month 
of  amount  financed. 

Question 
Should  the  plan  be  adopted? 


PART  IX 
DELIVERY  OF  ORDERS 


PART  IX 


DELIVERY  OF  ORDERS 

OUTIJNE 

A.  Relation   of   Fiixino    and  Dklivery  of  Orders  to 
Sales. 

B.  Plant  and  Equipment  for  Filllng  and  Shipment  of 
Orders. 

C.  Planning  and  Operating  of  Stock   and   Shipping 
Rooms. 

1.  Application   of   scientific    numagenicnt    principles 

to  storing  of  finished  goods. 

2.  Storing  prol^lerns  in  sales  department;  warehous- 

ing. 

1).     Planning  and  Scheduling  of  Shipments. 

E.      Handling  Orders. 

1.  Billing  system. 

2.  Packing-room  operation  and  control. 

3.  Shipment. 

4.  Traffic  management  from  view-point  of  sales  d(>- 

partment. 


GENERAL  QUESTIONS* 

A.     Relation  of  Filling  and  Delivery  of  Orders 

TO  Sales. 

Are  the  filling  and  delivery  of  orders  to  be  considered 
functions  of  the  sales  department;  if  not,  how  should  the 
needs  of  the  department  for  building  up  a  satisfactory 
clientele  through  scM'vice  be  met?  Does  the  necessity  of 
handling  both  inward  and  outward  shipments  furnish  a 
valid  argument  for  placing  control  of  siiippiug  in  a  sepa- 
rate department? 

559 


oGO       PK()HLi;.MS  1\  SALES  MANAGEMENT 

B.  Plant  and  Equipment  for    Fiixing  and  Ship- 
ment OF  Orders. 

\\  li;il  pl.iiil  ;iii(l  (■(|iii|tiiiciil  arc  ic(miic(l  tof  the  (illiiij;' 
and  shipiiiciit  of  goods?  Should  .-election  and  provision 
of  ('(inipnient  he  controlled  hy  the  sales  department  if 
shippin<i-  actixities  are  so  cont  lojjed? 

C.  Planning  and  Operating  of  Stock  Rooms  and 
Shipping  Rooms. 

Where  stocks  of  finished  goods  are  carried  ready  for  ship- 
ment, to  what  extent  is  the  application  of  the  principles 
of  scientific  management  as  i-elated  to  store  systems  in 
manufacturing  establishments  feasible?  To  what  extent 
is  the  planning  necessary  to  avoid  excessive  stocks  and 
shorts  a  function  of  the  sales  department? 

Under  what  circumstances  is  it  necessary  to  establish 
warehouses  at  other  points  than  at  the  plant,  in  order  to 
satisfy  the  requirements  of  customers  with  regard  to 
delivery?  How  is  the  type  of  warehouse  required  to  be 
determined? 

D.  Planning  and  Scheduling  of  Shipments. 

How  can  shipments  be  planned  and  scheduled  when  no 
stock  is  maintained?  What  methods  may  be  used  to  in- 
sure {)romj)t  shipment  without  entailing  excessive  costs? 

E.  Handling  Orders. 

What  routine  is  required  for  the  handling  of  orders?  Is 
it  possil)le  to  establish  a  standard  i)ractice  in  the  handling 
of  orders?  Is  the  handling  of  claims  for  losses  during 
transit  a  function  of  the  persons  in  charge  of  filling  and 
delivery  of  orders? 

*Anything  approaching  complete  treatment  of  delivery  of  goods,  in- 
cluding filling  of  orders,  invoicing,  storing,  and  shipment  is  lacking. 
The  general  works  upon  industrial  management  which  contain  references 
to  routing,  planning  and  operation  of  stores  as  applied  to  manufacturing 
plants  may  be  of  some  assistance,  but  little  attention  is  given  to  the 
handling  of  finished  goods.  See,  for  instance,  E.  D.  Jones,  The  Adynin- 
istratioK  of  I ndud rial  Enterprises,  Chapters  XVII  and  XX;  J.C.  Duncan, 
Principles  of  Industrial  Manaf/ement,  Chapter  XVIII;  Hugo  Diemer, 
Factory  Organizatian  and  Administration,  Chapter  X\'I;  Dexter  S.  Kimball, 
Principles  of  Imlustrial  Organization,  Chapter  X;  H.  B.  Twyford,  Stor- 
ing: Its  Economic  Aspects  and  Proper  Methods.  Trade  publications  in 
various  lines  contain  occasional  articles  with  reference  to  billing,  storing, 
and  shij)ping.  Reference  is  made  later  to  bulletins  of  the  National 
Wholesale  (Irocers'  Association. 


DELIVERY  OF  ORDERS  561 

Problem  316 
Control  of  Packing  and  Shipping 

The  Reynolds  Company  produces  a  full  line  of  con- 
struction machinery  which  it  sells  through  branches 
located  in  all  important  centers.  Packing  and  shipping 
of  goods  are  handled  by  the  production  department, 
but  the  control  of  warehouses  is  handled  by  the  service 
department  of  the  sales  division.  The  work  of  the 
service  department  is  stated  in  the  sales  organization 
manual  as  follow^s: 

Executive:  The  head  of  this  department  is  an  Assis- 
tant General  Sales  Manager. 

Purpose:  The  purpose  of  the  Service  Department  of 
the  Sales  Division  is  to  handle  all  business  of  the  Sales 
Division  not  requiring  action  by  the  Vice  President  but 
which  lies  outside  of  the  actual  business  of  selling  and  the 
proper  handling  of  a  client's  order  from  the  time  it  is  taken 
by  the  salesman  until  the  transaction  has  been  completed. 

The  major  work  of  this  department  can  be  expected  to 
lesult  from  orders,  together  with  the  processes  of  filling  them 
and  the  necessary  ensuing  relations  with  other  departments 
and  divisions  and  with  the  client.  The  specific  duties  of 
the  Service  Department  are  outlined  in  the  next  succeeding 
paragraphs.  The  only  exception  to  this  general  statement 
is  in  the  case  of  specific  duties  naturally  coming  under  this 
department  but  which  have  been  especially  assigned  to 
some  other  department. 

Divisions  of  Work 

The  work  of  the  department  calls  for  three  major  sub- 
departments: 

1 — Order  Department 

2 — Field  Inspection  &  Installation  Department 

3 — Stockkeeping  Department 

(1)     Order  Department 

This  department  receives  orders  from  clients  through 
Field  Offices,  agencies  or  other  sources,  by  mail,  telegraph 
or  telephone;  checks  sales,  prices  and  delivery  promises, 
places  the  orders  in  the  proper  foi-m  and  transmits  them  to 
the  departments  or  divisions  interestcMJ.  It  keeps  proper 
records,  and,  upon  shipmont  boing  made,  invoices  the 
customer. 


■)62        PIUHU.l^MS  IX  SALES  IMAXAOEMENT 

'I'lic  main  (li\isi()ns  of  this  sub-dopartmont  are  as  follows: 
( 'iiicf  Clerk,  Order  l')(^i')ai"tin(Mit,  In -C'liarpie 
Issuiiifj;  Cleik 
Pri(v  Clerk 
Keferenee  Clerk 
Invoice  ( 'leik 
Eile  ( 'lerk 
Record  ( 'lerk 
Funetioninfi;,-- 

Example  1:  An  order  for  unit  e(}ui|)nient  is  received 
l)y  mail  or  otherwise  from  the  District  Offices  or  from  other 
sources  by  the  Service  Department.  It  is  automatically 
transmitted  to  the  Order  Department,  where  the  order  is 
then  written  up  on  forms  provided  for  the  purpose  and 
transmitted  to  each  of  the  following: 

On  orders  for  special  e(|uipment  or  on  equipment 
shipped  from  factories: 

Production  Division 4  copies 

Billing  Clerk 1  copy 

Department  Manager 1  copy 

District  Office 1  copy 

Sales  Order  Department ...  1  copy 

Example  2:  On  orders  for  standard  (Mpiipment  shipped 
from  stock: 

Manager  of  Warehouse 

Making  Shipment 3  copies 

Protluction  Division 1  copy 

Billing  Clerk 1  copy 

Department  Manager 1  copj' 

District  Office 1  copy 

Sales  Order  Department ...  1  copy 

Example  3:  Repair  Orders. — These  are  sent  direct  by 
the  person  or  department  receiving  same  to  the  Repair 
Shipment  Department  of  the  Production  Division,  which 
department,  when  they  have  executed  the  order,  sends  one 
copy,  with  complete  information,  to  the  Order  Department. 
The  Order  Department  checks  prices  and  invoices  the 
material  the  same  as  is  done  in  the  case  of  orders  for  unit 
ecjuipnient. 

(2)  Field  Inspection  &  Installation  Department 

This  department  handles  the  field  work  required  in  the 
proper  installation  of  equipment  or  plants,  makes  inspection 
of  eciuipment  in  the  hands  of  the  clients  at  intervals  to  be 
determined.  (Different  classes  of  equipment  will  suggest 
diffei'ent  integrals  of  inspection.)  It  handles  field  work 
encountered  through  comi)laints  of  faulty  equipment,  and 


DELIVERY  OF  ORDERS  563 

its  duties  include  any  necessary  adjustment  with  the  chent 
arising  from  faiku'e  of  Reynolds  equipment  to  give  reason- 
able satisfaction. 

The  organization  of  this  department  is, — 

Supei'intendent  of  Field  Inspection  &  Installation, 
In  Charge  Construction  Field  Inspectors, 
Industrial  Field  Inspectors 
Functioning, — 

Example  1:  Notice  is  received  from  the  Construction 
Department  that  Reynolds  ecjuipment  has  been  ordered 
for  use  on  a  job  of  size  or  for  a  plant,  requesting  the  per- 
sonal attention  of  a  Reynolds  representative  to  bring  about 
the  most  successful  installation.  This  matter,  either 
through  personal  direction  by  the  executive  of  the  Rey- 
nolds Department  or  automatically,  is  placed  in  the  hands 
of  the  Superintendent  of  Field  Inspection  &  Installation, 
who,  through  his  staff,  takes  charge  of  the  direction  of 
the  method  of  installation,  remaining  at  the  work  until  he 
is  satisfied  that  the  proper  use  and  care  of  the  equipment  is 
understood  b}'  the  client. 

Exam-pie  2:  Complaints  are  received  by  the  Service 
Department.  With  or  without  the  personal  direction  of 
the  Manager,  these  are  turned  over  to  the  Superintendent 
of  Field  Inspection  &  Installation,  who  either  personally 
or  through  his  field  inspectors  investigates  the  matter  and 
brings  about  an  adjustment  with  the  customer.  (Under 
the  heading  of  "Reports"  will  be  found  an  outline  of  a  report 
to  be  made  on  complaints.)  An  adjustment  may  be  of 
such  magnitude  that  final  decision  will  rest  with  the  head 
of  the  Service  Department,  but,  as  a  general  rule,  the  duty 
of  making  adjustments  rests  with  the  Superintendent  of 
Field   Inspection   &    Installation. 

(3)  Stockkeeping   Department 
This  department  is  responsible  for  the  actual  operation 
of  the  various  warehouses  and  handles  the  work  of  keeping 
the  necessary  centralized  stock  records. 

The  organization  of  this  department  is  as  follows: 
Warehouse  Stockkeeper 

Stock  Record  Clerk 
Warehouse  Men. 

QuestioJi 
Should  packing  and  shipping  be  removed  from  the 
Production    Division    and    be   placed    in    the    Service 
Department  of  the  Sales  Division? 


564      i'K()hli-:ms  in  sales  management 

Problem  'M7 
Systkm  for  Handling  Orders 

Systems  for  htiiulling  orders  vary  widely,  depending 
upon 

(a)  Size  of  concern  and  necessity  for  control. 
(6)  Types  of  products  handled. 

(c)  Type    of     business,    whether    manufacturing 

or  merchandising. 

(d)  Location     of    branches    and     manufacturing 

plants,  and  so  on. 

A  simple  system  used  by  a  large  number  of  concerns 
may  be  briefly  outlined  as  follows :  The  order  taken  by 
the  salesman  is  made  out  in  triplicate,  one  copy  given 
to  the  customer,  one  retained  by  the  salesman,  and  the 
original  sent  to  the  house  for  filhng.  In  the  house  the 
order  is  copied,  sometimes  being  distributed  on  different 
orders  according  to  departments.  The  form  may  be 
made  out  in  triplicate,  one  remaining  in  the  sales 
department,  one  going  to  the  stockroom,  where  it  is 
filled  and  checked,  and  the  third  copy  going  to  the 
credit  department.  If  the  credit  department  0.  K.'s 
the  order,  this  copy  is  returned  to  the  sales  department, 
and,  after  filling  out  and  pricing,  the  original  is  sent  as 
an  invoice  and  the  second  and  third  copies  filed  accord- 
ing to  the  nature  of  the  parti(;ular  company. 

Questions 

1.  What  are  the  weaknesses  of  such  a  system? 

2.  Under  what  conditions  does  it  give  the  needed 
control? 


DELIVERY  OF  ORDERS  565 

Problem  318 
Billing  System 

A  wholesale  grocer  uses  a  billing  system  which  may 
be  outlined  as  follows:* 

The  order  is  written  by  the  salesman  with  indelible 
pencil  on  the  customary  order  form.  After  passing 
Credit  Department  and  Order  Desk,  the  order  is  given 
to  the  duplicating  clerk,  by  whom  eleven  copies  are 
made  (without  re-writing)  on  a  duplicator.  Ten  copies 
are  sent  to  the  various  departments  of  the  house,  so 
that  the  goods  may  be  marked  and  sent  to  delivery 
platform  for  shipping.  The  assembling  of  goods  to  be 
shipped  to  any  one  customer  or  by  any  one  railroad  is 
done  only  on  dock.  The  eleventh  copy  is  sent  to 
Billing  Department,  and  from  it  a  ''skeleton"  bill  is 
made;  i,  e,,  bill  complete  with  exception  of  extensions; 
this  does  away  w4th  the  crowding  of  billing  clerks  at 
each  end  of  day. 

The  invoices  are  mailed  the  day  after  the  goods  are 
shipped,  unless  goods  are  being  sent  to  nearby  places; 
in  which  case,  they  are  sent  out  same  day.  When  an 
order  has  been  billed,  it  passes  through  the  Shipping 
Department  for  attention  as  a  bill  of  lading,  which  has 
previously  been  made  out,  and  then  is  given  to  a  clerk 
who  has  temporarily  filed  the  various  skeleton  invoices. 
This  clerk  then  compares  each  skeleton  invoice  with 
the  charge  sheet  and  makes  any  changes  on  the  invoice 
necessary  to  make  them  agree.  Invoices  and  charge 
sheets  are  then  sent  out  to  Extension  Clerk;  here,  two 
women  spend  half  their  time  extending  bills  in  pencil; 
one  extends  the  charge  sheet  and  the  other  the  invoice, 
and  the  totals  are  compared.  The  Extension  Depart- 
ment makes  about  7,000  extensions  per  day,  and  there 
is  not  an  average  of  one  error  in  arithmetic  a  month. 

The  weight  column  on  our  charge  sheets  and  bill- 
heads is  the  column  where  the  total  contents  is  shown. 
For  instance,  for  an  item  of  ten  cases  of  tomatoes 
the  weight  would  show  20,  signifying  that  there  are 

*Bulletin  National  Wholesale  Grocers'  Association,  February.  1921. 


r)6(l        1M{()BLEMS  IX  SAI.llS  MAXAGEMENT 

twenty  dozen  in  tlie  ten  eases  and  tliat  the  goods  are 
l)need  ))>  tlie  do/en;  tlierefore,  the  extension  would  be 
twenty  times  the  piice  i)er  dozen.  We  have  the  weight 
cohimn  filled  in  by  Iwo  exi^erienced  grocery  people,  one 
lilliii<;'  ill  Oil  iii\()iee  and  othci-  on  charge  sheet;  thus, 
errors  in  wcMght  coliiiiiii  mic  practically  eliminated. 

There  is  still  I'urlhei-  check  on  extensions  when  charge 
sheets  pass  through  the  Profit  Department.  The  profit 
clerks  read  the  entire  item,  and  the  item  is  re-figured 
with  the  cost  as  a  multiplier  and  the  total  cost  of  the 
item  is  shown  on  the  sheet  directly  opposite  the  total 
of  the  charge.  If  an  item  shows  excessive  profit,  or 
shows  below  cost,  there  is  an  investigation. 

The  charge  sheets  are  in  the  files  on  the  morning  of 
the  fourth  day  after  shipment.  There  is  no  check  on 
prices  other  than  the  careful  examination  of  the 
Country  Desk. 

Question 

Is  the  system  one  which  should  l)e  adopted  by  every 
wholesale  grocery? 


Problem  .'}1J) 

Manufacturer's  Order-Filling  System 

The  Henderson  Machinery  Company,  of  Buffalo, 
New  York,  sells  both  machinery  and  factory  supplies. 
Branches  have  been  estaijlished  in  principal  cities. 
Larger  machinery  is  sold  direct  to  factories  and  mills, 
while  factory  supplies  of  various  types  are  sold  through 
the  dealers.    At  the  main  office  orders  may  be  received: 

(1)  Direct  from  salesmen  going  out  from  warehouse; 

(2)  From  factories  ordering  direct ; 

f3)  Orders  may  come  from  branch  offices  for  direct 

shipment  to  customers; 
(4)  Requisitions  from  branches  for  replenishment  of 

stock. 


DELIVERY  OF  ORDERS  567 

Although  there  are  stockrooms  at  sales  headquarters, 
complete  stocks  of  machines  and  sup{)lies  are  not  main- 
tained. The  large  machines  are  shipped  direct  from 
factory,  while  for  some  of  the  slow-selling  supplies 
purchases  are  made  only  upon  the  basis  of  orders 
received.  In  filling  orders,  the  initial  step  is  the  filling 
out  of  the  order  blank.  Three  copies  are  made  for 
orders  taken  at  the  main  office :  one  is  called  the  original ; 
the  second  called  the  customer's  copy;  the  third  is 
the  tissue  copy  retained  by  the  salesman  in  his  order 
book.  For  orders  taken  through  the  branches  there  are 
four  copies:  first,  the  branch  original; second, the  branch 
customer's  file  copy;  third,  the  customer's  copy;  and 
fourth,  the  salesman's  copy.  The  form  of  this  order  is 
very  simple,  containing  merely  the  usual  heading — date, 
customer's  number,  branch  number,  salesman,  branch, 
shipped  to,  address,  charged  to,  shipped  via,  when — 
with  '^\11  orders  are  subject  to  acceptance  by  our 
main  office  at  Buffalo  and  contingent  to  any  conditions 
beyond  our  control."  Since  the  nature  of  the  products 
varies  widely,  no  special  ruling  is  used. 

A\Tien  the  copy  of  the  salesman's  order  is  received  at 
the  main  office,  four  order  forms  are  made  out  at  one 
writing.  The  first  of  these,  headed  ''Factory,"  gives 
date  shipped,  Buffalo  order  number,  customer's  order 
number,  and  how  shipped,  with  the  name  of  the  cus- 
tomer and  shipping  directions.  The  second  copy 
contains  memorandum  of  shipment.  The  third  is  called 
'' bookkeeping  copy"  and  the  fourth  "file  copy."  The 
only  difference  between  the  copies  is  that  the  factory 
cop3'  has  inserted  ''Please  send  the  goods  mentioned 
below  and  charge  to  our  account,  rendering  invoice 
promptly  for  this  order  only  to  the  X  Machinery 
Company,  Buffalo."  This  copy  of  the  order  is  used 
only  when  the  order  is  to  be  filled  from  the  factory  oi' 
the  plant  and  goods  are  not  in  stock  at  Buffalo.  If  the 
goods  happen  to  be  in  stock,  the  factory  copy  is 
destroyed.  The  file  copy  is  sent  to  the  stockroom, 
from  which  the  order  is  filled,  then  returned  to  the  order 
department  and  filed  with  filled  orders.    The  memoran- 


aOK         I'KOHLIvMS  IX  SALi:S  MAXA(  IIIM  i:X'r 

(luiii  of  sliipiiiciit  is  sent  to  (he  sliippinji;  department 
and  returnetl  to  the  order  dei)artnient  when  the  order 
is  filled.  The  order  is  then  priced  from  the  records  in 
the  order  dei)artmenl,  recorded  on  the  copy  marked 
"bookkeepinji."  which  is  then  sent  to  the  bookkeeping 
department  foi-  charginfj;  and  invoicinj;-.  When  the 
order  calls  for  articles  manufactured  by  the  company 
at  any  of  its  factories  but  not  kept  in  stock  at  Buffalo, 
the  factory  copy  is  sent  to  the  factory  to  be  tilled 
together  with  the  bookkeeping  copy.  The  bookkeeping 
copy  is  returned  when  the  order  is  filled  and  the  charges 
are  recorded  upon  it.  The  file  copy  is  filed  in  the 
customer's  folder  until  the  order  is  filled,  when  it  is 
filed  numerically  with  filled  orders. 

If  the  article  ordered  is  one  which  the  company 
handles,  but  which  is  neither  manufactured  by  the 
company  nor  kept  in  stock,  the  factory  copy  of  the 
order  (properly  addressed)  is  sent  to  the  company  from 
which  this  article  is  customarily  purchased  (as  de\er- 
mined  by  the  purchasing  department) . 

In  order  to  maintain  stock  of  articles  in  which 
demand  warrants  and  to  give  control  of  stores,  the 
company  uses  a  stock  card  giving  amounts  received 
and  disbursed,  balances,  and  list  of  orders.  The 
headings  of  the  cards  contain  description  of  the  article, 
its  location  in  the  stockroom,  concern  from  which 
purchased,  maximum  and  minimum  stock  limits. 
White  cards  are  used  for  ai'ticles  which  are  commonl}' 
carried  in  stock;  red  cards  foi-  articles  which  are 
purchased  only  upon  receipt  of  orders  fi^om  customers. 
By  glancing  o\er  the  red  cards  it  is  a  comparatively' 
simple  matter  to  decide  whether  or  not  demand  is 
sufficient  to  warrant  stocking  a  particular  article. 
When  the  minimum  amount  has  been  reached  in  the 
stockroom  for  any  particular  article,  the  usual  pro- 
cedure is  to  send  requisition  to  the  purchasing  depart- 
ment containing  a  brief  transcript  of  information  from 
the  stock  card  as  to  customers  and  amount  needed  to 
keep  up  stock. 


DELIVKUV  OF  ORDERS  569 

When  a  branch  office  salesman  secures  an  order,  the 
original  and  first  carbon  copy  are  sent  to  the  branch 
office,  the  first  carbon  being  for  the  customer's  file  and 
called  "branch  customer's  copy."  The  customer's  copy 
is  of  course  given  to  the  customer,  while  the  fourth  copy 
is  retained  in  the  branch  salesman's  book.  If  the 
material  sold  is  stocked  at  the  branch,  the  procedure  of 
copying  the  order  is  much  the  same  as  at  the  main 
office.  The  copies  of  the  order  made  from  the  original 
salesman's  order  are  as  follows: 

(1)  Factory  copy,  used  only  when  shipment  is  to  be 
made  direct  from  factory. 

(2)  Bookkeeping  copy,  destroyed  if  order  is  filled 
from  stock. 

(3)  A  file  copy,  used  the  same  as  in  the  main  office, 
sent  to  the  shipping  room  and  returned  after  filling. 

(4)  If  the  order  is  filled  from  outside  purchases, 
there  is  a  so-called  "extra"  copy,  which  is  kept  in  the 
cost  folder.  This  is  kept  in  a  file  until  the  order  is 
filled,  then  the  file  copy  is  substituted  to  show  that 
the  order  is  filled.  For  certain  types  of  shipments  this 
is  put  into  the  customer's  folder  for  reference. 

(5)  The  memorandum  of  shipment. 

(6)  The  sixth  copy  is  the  branch  file  copy,  filed  by 
order  numbers.  A  special  form  is  used  for  filled  orders 
from  dealers  for  supplies,  and  one  of  the  four  copies 
called  the  "Stock-clerk's  copy"  being  sent  to  the  stock- 
clerk  where  the  order  is  filled.  The  second  is  the 
bookkeeping  copy,  sent  with  the  stock-clerk's  copy 
to  the  stock-clerk  and  retiu-ned  after  filling  to  the 
bookkeeping  department.  The  shipping  memoran- 
dum is  sent  to  the  shipping  department  and  returned 
to  the  order  department  when  the  order  is  filled. 
The  order  is  then  priced  from  the  records  and  recorded 
on  the  copy  marked  "bookkeeping,"  which  is  sent  to 
the  bookkeeping  department.  The  office  copy  is  filed 
according  to  customers. 


.570      i'km)Hij:.ms  in  sales  management 

Qiiestio7is 

1.  Docs  tlic  system  iiuHt-jited  ^We  the  desired 
control  over  orders  and  sliipinenls? 

2.  Wliiit  chang;es  should  be  made  in  order  to  adapt 
it  to  a  business  filling  orders  entirely  from  stock,  but 
1ki\  in{2;  the  same  general  organization  of  branch  offices? 


Problem  li'iO 

Ai'i'MCATioN  of  Scientific  Methods  to  Packing 

AND  Shipping 

The  Clifford  Manufacturing  Company  is  located  in  a 
suburb  of  Chicago  near  the  junction  of  two  important 
railroads.  This  location  gives  good  service  for  shipment 
toward  the  East  and  Southeast.  Motor  truck  express 
service  is  available  for  Chicago  and  suburbs,  while  the 
American  Railway  Express  operates  on  both  of  the 
railroads. 

The  company's  products  comprise  a  line  of  absorbent 
gauze  and  cotton  for  surgical  and  household  use.  The 
gauze  products  are  in  seven  main  classes:  bolt  goods, 
sewed  goods,  cut  goods,  gauze  rolls,  bandage  rolls  and 
bandages,  gauze  ends,  seconds  and  shorts.  The  cotton 
line  includes  five  grades:  standard  (which  is  the  best 
grade),  dispensary  (next  grade),  waste,  filter,  and 
jewelers'  cotton  (used  for  lining  jewelry  boxes).  In 
its  processes  the  company  is  a  cotton  textile  finishing 
compaii}',  cloth  being  purchased  in  the  grey  cotton  in 
the  form  of  raw  cotton,  waste,  strip,  or  combing. 
Separate  storage  is  provided  for  cotton  and  grey  cloth 
as  raw  materials,  and  for  work  materials.  The  products 
of  the  company  are  sold  both  to  consumers,  particularly 
hospitals,  and  to  dry-goods  \\holesalers  and  retailers, 
wholesale  druggists  and  retail  druggists  for  resale. 


DELIVERY  OF  ORDERS  571 

It  is  the  custom  of  the  trade  to  give  orders  which 
call  for  delivery  almost  entirely  on  two  days:  the  first 
and  the  fifteenth  of  the  month.  The  daily  volume  of 
orders  received  fluctuates  greatly.  It  is  influenced  by 
the  cotton  market,  because  the  prices  of  the  finished 
product  bear  a  close  relationship  to  the  price  of  raw 
material. 

When  an  order  is  received  by  the  company,  it  is  first 
of  all  passed  to  the  credit  division  of  the  accounting 
department  for  approval;  secondly,  it  goes  to  the  order 
division  of  the  sales  department,  where  it  is  registered, 
indexed,  and  transcribed.  Nine  copies  are  then  typed 
upon  the  billing  machine.  As  the  third  step,  the  order 
goes  to  the  planning  division  of  the  mill,  where  it  is 
ascertained  whether  or  not  the  material  is  in  stock;  if 
so,  deductions  are  made  from  the  balance-of-stores  card 
and  arrangements  made  for  manufacturing  orders  for 
the  materials  not  on  hand.  The  order  then  goes  to  the 
stockrooms  or  the  work  material  stores  division, 
where  the  items  are  picked  out.  They  are  then  sent  to 
the  packing  division  for  packing  and  to  the  traffic 
division  for  shipping.  Finall^^,  the  order  reaches  the 
accounts  receivable  division  of  the  accounting  depart- 
ment for  billing.  The  nine  copies  of  the  order  are 
distributed  as  follows : 

(1)  Invoice  copy. 

(2)  Invoice  duplicate  copy  to  billing  division. 

(3)  Sales  book  copy. 

(4)  Statistical  department  copy. 

(5)  Sales  office  copy. 

(6)  Acknowledgment  to  customer. 

(7)  Order  department  coi)y. 

(8)  Planning  department  cojn'. 

(9)  Shipping  order  copy. 

Copies  7,  8  and  9  are  dispatched  by  hourly  messenger 
service  to  the  planning  division  of  the  mill. 

In  the  planning  division  there  are  three  persons:  one 
supervises  the  order  of  work,  another  is  the  information 
clerk,  and  the  third  is  the  clerk  who  writes  out  the 


572         PKOBLKMS  IN  SALl-:s  MANACIKMKNT 

iXHluisitions  of  woik  iiiatciial  stores,  keeps  the  records 
and  the  files.  The  time  al  which  the  order  is  received 
is  stamped  on  tlie  tliree  coijies.  They  are  then  classified 
as  "current"  or  "future"  orders,  depending  upon  the 
delivery  date  specified.  A  "fut  ure"  order  is  regarded  as 
any  order  wliich  calls  for  deli\'erv  more  than  two  weeks 
in  advance.  Orders  to  be  sliijiped  within  two  weeks 
are  classified  as  "at  once"  orders  or  "urgent."  They 
are  classified  further  as  "express"  or  "parcel-post" 
orders,  "urgent,"  "freight,"  and  "all  others."  "Ex- 
press" and  "parcel-post"  orders  are  to  be  shipped 
within  24  hours,  "frei<2;lit"  orders  within  48  hours, 
wliercver  stock  is  available. 

After  orders  are  arranged  according  to  priority,  they 
are  given  to  the  clerk  handling  the  balance  of  stores 
records.  If  the  goods  are  in  stock,  the  items  are 
marked  "ship";  if  not,  they  are  marked  "make." 
When  the  orders  come  back  to  the  sales  order  group, 
"ship"  orders  are  sorted  from  "make"  orders.  "Make" 
orders  then  go  to  the  overdue  file  and  are  held  until 
materials  are  manufactured  and  received.  The  "ship" 
orders  are  given  to  the  issue-writer,  who  makes  out  a 
separate  requisition  for  each  item  marked  "ship." 
The  number  of  such  requisitions  is  noted  on  the  order. 
The  orders  or  issues  are  then  ready  for  dispatch  to  the 
storerooms  and  to  the  packing-room,  one  copy  being 
kept  in  the  acti\'e  file  of  the  planning  department  and 
the  requisitions  being  sent  by  messengers  to  the  work 
material  storerooms  and  the  shipping  order  copy  taken 
to  the  packing  department.  When  the  goods  have 
been  picked  out  in  the  storerooms  and  sent  to  the 
packing  floor,  the  requisitions  w^hich  the  stores  division 
has  filled  are  sent  back  to  the  planning  division.  The 
traffic  division  determines  how  the  goods  will  be 
packed  and  sent,  stamping  on  the  face  of  the  shipping 
copy  of  the  order  classification  rate  and  shipment. 
The  packing  foreman  then  checks  off  the  items  on  the 
shipping  order;  and,  when  all  items  are  assembled,  the 
foreman  gives  the  shipping  order  to  his  assistant,  who 
types  three  copies  of  the  packing  slip  for  each  container. 


DELIVERY  OF  ORDERS  573 

The  factory  is  operated  on  Taylor  principles  with 
considerable  success.  It  appears,  however,  that  the 
packing  and  shipping  department  does  not  operate  so 
smoothly  as  is  desired,  frequently  clogging  up  and 
rendering  it  impossible  to  give  the  amount  and  type  of 
service  which  the  company  wishes  to  give. 

Questions 

1.  How  should  the  company  go  about  developing 
standard  practice  in  packing? 

2.  To  what  extent  can  Taylor  principles  be  applied 
to  packing  and  shipping? 


Problem  321 
Establishment  of  Warehouses  to  Facilitate  Delivery 

The  Haskell  Biscuit  Company,  of  Rochester,  produces 
a  line  of  biscuits  and  crackers  which  are  widely  adver- 
tised and  which  are  sold  upon  a  quality  basis  through- 
out the  territory  east  of  the  Mississippi.  The  company 
maintains  warehouses  in  Philadelphia,  New  York,  and 
Chicago  to  facilitate  the  shipment  of  its  product  to 
dealers  in  the  vicinity.  In  New  York  the  grocery 
wholesale  district  is  in  the  downtown  section,  while 
the  retail  grocery  business  is  scattered  widely  over  the 
entire  metropolitan  area.  Fresh  stock  is  essential  for 
continuance  and  development  of  a  biscuit  business. 
The  sales  manager  of  the  company  claims  that  these 
warehouses  should  be  discontinued  and  that  shipment 
should  be  made  direct  from  the  Rochester  factory;  he 
contends  that  delivery  will  be  made  as  promptly  as  if 
sent  to  the  warehouse. 

Question 
What  action  should  be  taken? 


57-1      imu.)bij:ms  in  :sales  maxac;e.mkxt 

PUOHLKM     '5'-2'-2 

Kkskkvk  Stocks  at  IJhaxcii  Offices 

The  K^llld()ll)h-^^'olburn  Company,  manufacturing 
saws,  machine  knives,  and  files,  operates  factories  in 
Cleveland,  in  Pittsl)urgli.  and  in  Worcester,  Mass.,  and 
also  a  steel  mill  in  HulTalo.  The  company's  annual 
sales  in  1915  exceeded  $9,000,000  and  for  the  first  three 
months  of  lOlO  were  running  at  the  rate  of  approxi- 
mately SI  1, ()()(),()()()  j)er  annum. 

This  company  distributes  its  product  through  11 
branch  offices  in  various  parts  of  the  United  States  and 
Canada.  These  branch  offices  sell  direct  to  large 
consumers,  and  lo  the  retail  trade,  such  as  hardware 
stores.  It  has  been  the  custom  to  carry  at  each  branch 
office  from  two  to  three  months'  supply  of  the  different 
lines  manufactured.  The  quantity  for  the  various 
items  is  determined  by  a  careful  study  of  the  sales  in 
previous  years.  Approximately^  four  months'  supply 
of  finished  material  is  kept  in  stock  at  the  factories. 

About  May,  1916,  the  branch  managers  were  con- 
tinually reporting  to  the  main  office,  which  is  at 
Worcester,  that  two  or  three  months'  stock  was  not 
sufficient  to  take  care  of  the  constantly  increasing 
demand,  and  they  requested  that  all  reserve  stocks  be 
stored  at  the  branch  offices.  With  the  possible  ex- 
ception of  circular  band  saws,  which  are  to  a  large 
extent  sold  on  the  Pacific  Coast,  the  market  for  their 
other  products  is  fairly  divided  among  the  A'arious 
branches. 

Question 

Should  the  manager  of  the  Randolph-Welburn 
Company  comply  with  the  request  of  the  branch  office 
managers  and  transfer  the  reserve  stocks  to  the 
branches? 


DELIVERY  OF  ORDERS  575 

Problem  323 
Priority  of  Parts  Orders  Over  Machine  Orders 

The  Deyfoot  Manufacturing  Company  is  engaged 
in  the  manufacture  of  textile  machinery  and  machine 
parts.  The  total  sales  amount  to  approximately 
$6,000,000  a  year,  of  which  $1,000,000  represents  the 
sales  of  machine  parts. 

The  execution  of  work  in  the  plant  has  been  system- 
atically developed,  and,  as  a  result,  the  production 
department  for  the  past  number  of  years  has  been 
able  to  send  their  selling  organization  definite  schedules 
showing  delivery  dates  for  different  types  of  machines. 
For  example,  one  of  these  reports  would  show  that 
the  sales  force  could  promise  a  delivery  date  on  type 
22  of  from  three  to  four  weeks  from  the  time  an  order 
was  taken.  The  company  manufactures  for  stock  and 
carries  in  a  special  service  storeroom  many  of  the 
standard  parts  of  its  machines  in  order  to  give  its 
customers  service  on  the  replacement  and  repairing 
of  parts. 

As  a  result  of  this  coordination  between  the  produc- 
tion and  sales  departments,  the  company  has  gained 
a  reputation  throughout  the  country  of  always  deliver- 
ing finished  machines  on  the  dates  promised  and  of 
giving  good  service  on  repair  and  replenishment  orders. 
The  executives  have  taken  great  pride  in  this  reputa- 
tion, and  the  sales  manager  always  makes  it  a  point 
in  training  new^  salesmen  to  impress  upon  them  the 
necessity,  when  talking  with  prospective  customers, 
of  stressing  the  fact  that  the  company  always  lives  up 
to  promised  delivery  dates  on  finished  machines. 

During  1919,  the  company  was  22  weeks  behind 
in  its  production  program,  and  it  frequently  hap- 
pened that  the  factory  was  out  of  stock  on  parts 
called  for  by  customers  for  repair  orders.  In  fact,  in 
filling  these  parts  orders,  the  production  department 
was  at  a  loss  as  to  whether  to  give  a  machine  order 
priority  over  a  parts  order.  The  head  of  the  produc- 
tion department,  therefore,  asked  the  sales  manager 
and   the  president   of  the    company    to    advise    him 


576        PROBLEMS  IN  SALES  MANAGEMENT 

whctlicr  in  their  opinion  parts  orders  should  be  given 
priority  over  nuicliino  orders. 

Question 
Should  the  sales  manager  and  the  president  of  this 
company  have  established  the  policy  of  giving  parts 
orders  priority  over  machine  orders? 


Problem  3'24 

Standardization  of  Forms — Purchase  Order 

The  Committee  on  Standardization  of  Forms  of 
the  Sales  ^Managers'  Bureau  of  the  vSt.  Louis  Chamber 
of  Commerce  has  sent  the  following  letter  to  sales 
managers : 

Herewith,  please  find  draft  of  tentative  form  of  pur- 
chase order  submitted  by  the  National  Association  of 
Purchasing  Agents.  You  are  probably  aware  that  a 
standard  invoice  form  has  already  been  passed  on  and 
adopted. 

The  National  Association  of  Purchasing  Agents,  with 
whom  we  are  cooperating,  have  asked  our  membership 
for  an  expression  on  the  purchase  order  form  and  we  would 
appreciate  your  going  over  this  carefully  and  advising  us 
of  any  suggestions  or  changes  which  may  seem  necessary. 

It  appears  to  us  that  a  space,  or  additional  line,  should 
be  added  right  under  "Shipped  to,"  reading  "Charge  to," 
because  it  frequently  happens  that  an  agent  will  receive  an 
order  from  a  sub-dealer  to  be  shippefl  and  charged  to  a 
third  party. 

You  will  note  there  is  a  second  sheet  attached,  carrying 
optional  conditions  which  may  be  embodied  in  the  pur- 
chase order.  It  appears  to  your  committee  that  the  word- 
ing on  this  purchase  order  forms  a  one-sided  contract  in 
favor  of  the  buyer,  and  that  clauses  limiting  reasons  for 
cancellation  should  l)e  made  a  part  of  this  ])urchase  order; 
also  clauses  as  to  limitations  of  quantities  and  liability  from 
accidents  or  damages  due  to  misuse  or  abuse  of  the  articles 
furnished.      \\'hil('  we  may  not  be  able  to  get  the  Purchasing 


DELIVERY  OF  ORDERS  577 

Agents'  Association  to  adopt  such  clauses,  nevertheless  they, 
and  perhaps  others  along  this  line,  should  go  on  the  forms 
used  by  your  own  salesmen  when  taking  orders. 

The  form  submitted  followy: 

Form  No.  purchase  order 

JOHN  DOE  &  CO. 

100  WEST  STREET 
BOSTON,  MASS. 

ORDER  NO. 

Seal,    trade-mark,  Tliis  miinher  must  appear 

or  insignia  can  be  on    invoice,     B/L,    cases, 

used  in  this  space.  l)undk\s,  packing  lists,  and 

correspondence. 

Date 192 

Req.  No. 
Dept. 
Stores  or/ 
Div.  No.    f 
Seller's  No. 


Please  SHIP  the  following  merchandise  SUBJECT  TO 
CONDITIONS  below: 

Ship  to  Ship  Via 

Date  to  be  shipped  Terms  F.  0.  B. 

QUANTITY  ARTICLES  PRICE 

TENTATIVE    FORM    NO.     1. 

of 

STANDARDIZED  PURCHASE  ORDER 

DRAWN  BY 

STANDARDIZATION    COMMITTEE 

of 

NATIONAL   ASSOCIATION    OF   PURCHASING    AfiENTS 

SIZE    8J^   X    11 

NUMBER    OF    COPIES   OPTIONAL 

COLOR  OF  ORIGINAL  NOT  YET  DETERMINED. 

Mail  invoices  (in  duplicate)  and  original  B/L  to 
IMPORTANT  CONDITIONS 

1.  Mail  acceptance  of  this  order  immediately. 

2.  No  charges  allowed  for  boxing,  packing  or  crating. 

3.  If  prices  are  higher  than  specified,  do  not  ship.     Advise  us. 

4.  If  price  is  omitted  on  order,  it  is  agreed  that  your  price  will  be  the  lowest 

prevailing  market  price. 


r)7s      i'K()HI.i:ms  ix  sal?:s  management 

5.  Do  not  sliip  prior  to  any  Bpecifiod  date,  unless  otherwise  notified. 

6.  GoodH  subject  to  our  inspection  on  arrival  notwithstanding  prior  pay- 

ment to  obtain  ca.sh  discount. 

7.  Goods  rejected  on  account  of  inferior  fjuality  or  workmanship  will  be 

returned  to  you  with  charne  for  transportation  both  ways,  and  are 
not  to  be  replaced  except  upon  receipt  of  replacement  inirchase 
order  from  u.s. 

8.  It  is  UKried  tliut  Bt)ods  ordered  above  shall  comply  with  all  Federal  Luwh 

relative  thereto,  and  that  you  will  defend  and  save  harmless  this 
Company  from  lo.ss,  cost  or  damuKC  by  reason  of  actual  or  alleged 
infringements  of  letters  patent  concerning  same. 

9.  Orders  not  shipped  on  the  date  .specified  may  be  cancelled  by  us.     In 

case  order  calls  for  iiartial  shipment,  balance  may  be  cancelled  or 
suspended    upon    notice,    and    suspended    shipments    may    be    later 
taken  out  if  on  or  before  last  shipping  date  specified. 
10.   If  these  conditions  are  not  acceptable  please  advise  us  on  receipt  of  the 
orilers,  and  before  you  make  any  shipment. 

Purchasing  Agent. 

The  following  were  suggested  as  optional  clauses  to 
fit  needs  of  particular  concerns : 

Invoices  in   duplicate,  shipping  nicniorandum  and  bill 

of  lading  with  full  routing  must  bo  mailed  to  us  at 

on  date  of  shipment. 

Unless  otherwise  specified  payments  of  invoices  are 
subject  to  a  cash  discount  on  15th  of  month  following 
receipt  of  invoice. 

Material  will  be  received  subject  to  inspection  and  if 
found  defective,  or  not  in  accordance  with  specifications, 
will  be  returned  at  your  expense. 

A  delivery  receipt  showing  order  number  and  descrip- 
tion of  material  must  accompany  all  City  deliveries. 

By  accepting  this  order  you  agree  to  defend,   protect 

and  save  harmless    ,  its  customers  and 

the  users  of  its  products,  against  all  suits  and  from  all 
damage  claims,  and  demands  for  actual  or  alleged  infringe- 
ments of  letters  patent  by  reason  of  the  use  of  the  articles 
hereby  ordered. 

We  reserve  the  right  to  cancel  this  order  or  any  unfilled 
portion  thereof  if  deliveries  are  not  made  as  specified  herein. 

If  this  order  is  subcontracted  the  subcontractor  must 
be  instructed  to  mark  all  packages  with  this  order  number. 

We  will  not  accept  substitutions. 

This  company  reserves  the  right  to  cancel  all  or  part 
of  this  order  if  not  filled  within  the  specified  time. 

By  parang  your  invoice  before  arrival  and  inspection 
of  our  purchase  we  avail  ourselves  of  the  cash  discount 
onlj^,  and  do  not  thereby  accept  quality  or  quantity  as 
approved. 

All  goods  shipped  on  account  of  this  order  will  be  care- 
fully inspected,  and  if  rejected  by  us  on  account  of  material, 


DELIVERY  OF  ORDERS  579 

workmanship  or  other  defects,  same  will  \)v  lick!  subject  to 
your  orders,  freight  and  cartage  chai'geahle  to  your  account, 
and  when  returned  are  to  be  replaced  ONLY  on  replace- 
ment purchase  order. 

The  Supplier  herein  guarante(\s  that  tiie  sale  or  use  of 
its  product  will  not  infringe  any  United  States  Patent  or 
process  of  manufacture  and  covenants  that  it  will,  at  its 
own  expense,  defend  every  suit  or  action  which  shall  be 

brought  against or  those  selling  or  using 

any  product  of  the  Supplier,  for  any  alleged  infringement 
or  claim  of  infi  ingement  of  any  patent  or  process  of  manu- 

factui-e  by  reason  of  the  sale  or  use  of product 

and  agrees  that  it  will  pay  all  costs,  damages  and  expenses 
which might  sustain  therebj^ 

Questio7is 

1.  Should  a  sales  manager  accept  orders  subject 
to  conditions  expressed  in  this  form? 

2.  Are  any  clauses  objectionable  from  view-point 
of  sales  manager? 


PART  X 

ADMINISTRATIVE  POLICIES 
AFFECTING  SALES  MANAGEMENT 


PART  X 

ADMINISTRATIVE  POLICIES 
AFFECTING  SALES  MANAGEMENT 

OUTLINE 

A.  Financial  Policies. 

Financial  policy  of  the  concern  as  determined  by  the 
administi'ation,  that  is,  the  board  of  directors,  presi- 
dent or  other  general  executives,  fixes  the  amount 
available  for  development  of  sales  and  the  volume  of 
sales,  which  under  given  conditions  can  be  financed. 
Channels  of  distribution,  extent  of  advertising,  size 
and  character  of  sales  organization,  and  certain  sales 
policies  depend  largely  upon  predetermined  financial 
policy. 

B.  Production  Policies. 

Policies  with  respect  to  the  nature  and  quality  of 
product,  manufacturing  for  stock  or  to  oi'der,  volume 
of  production,  and  standardization  will  often  be 
determined  by  administrative  authority  and  will  in 
the  same  degree  limit  the  sales  organization's  choice 
of  policy  and  method. 

C.  Organization  Policies. 

General  organization  policies  of  the  administration 
will  determine : 

(1)  The  authoi'ity  of  the  sales  department. 

(2)  The  place  of  related  sales  activities,  such  as 

export,  advertising,  sales  promotion;  rela- 
tion to  the  sales  department  proper. 

(3)  Relation  of  sales  department  to  other  de- 

partments of  the  enterprise. 

(4)  Location  of  main  sales  office. 

The  selection  of  the  chi(>f  sales  executive  is  likewise 
an  administrative  function. 

5cS3 


584        PRnRM:MS  IX  RALES  MANAGEMENT 

F).       MARKETINf;    POLR'IKS. 

'rii(>  adiiiiiiislrativc  licnds  of  the  husiiioss  frc(iu('ntly 
(Ictci'iiiiiic  tlic  {iciicral  natui'c  of  iiiai'kctinp;  iiiothods; 
for  instance,  wlictlicr  jioods  ai'c  to  Ix'  sold  direct  to 
consuiiKMs.  hy  iiiail-ordci'  nicthods,  or  throujih  the 
customary  iniddleiiiaii.  Likewise,  major  policies 
i'e<j;ardiii^  advertising,  brands,  and  sei'vice. 

E.       CONTHOI.. 

The  jieneral  nature  and  extent  of  control  of  sales 
departments   by   administrative   officers— budgetary' 

control,  mastei-  planninir. 


GENERAL  QUESTIONS 

A.  Financial  Policies. 

Given  certain  capital  resources,  how  much  can  be  set 
aside  for  the  development  of  sales?  To  w'hat  extent 
should  this  amount  be  determined  for  the  sales  manager? 
To  what  extent  by  the  sales  manager?  By  determining 
the  amount  of  working  capital  available  for  financing 
sales,  does  the  administration  determine  also  the  chan- 
nels of  distribution,  the  extent  of  advertising,  the  size 
and  character  of  the  sales  organization?  How  does 
limited  working  capital  afTect  sales  policies? 

B.  Production  Policies. 

To  what  extent  is  the  determination  of  nature  and 
quality  of  product  to  be  manufactured  a  matter  for 
administrative  decision  or  to  what  extent  should  it  be 
left  to  the  sales  department?  In  what  way  should 
the  administrative  authorities  provide  for  coordination 
of  production  and  sales?  Should  a  company  attempt 
to  lift  its  products  out  of  the  class  of  staples  or  unidenti- 
fied goods;  if  so,  what  changes  should  be  made?  To 
what  extent  should  these  matters  be  left  by  the  sales 
department   to   higher   authorities? 

C.  Organization  Policies. 

What  should  be  the  limits  of  authority  of  the  sales 
department?  What  should  be  the  relationship  between 
the  sales  department  and  the  various  forms  of  sales 
activities,  such  as  export  selling,  advertising,  and  sales 
promotion?     What  should  be  the  relation  of  the  sales 


ADMINISTRATIVE  POLICIES  585 

department  to  non-selling  departments?  What  should 
be  the  location  of  the  main  sales  office?  Whom*  should 
the  enterprise  select  as  chief  sales  executive?  How 
should  he  be  selected? 

D.  Marketing  Policies. 

To  what  extent  should  administrative  iieads  of  a  lousi- 
ness determine  general  marketing  policies?  Should  the 
decision  as  to  direct  sale  to  retailers  or  other  departure 
from  traditional  channels  be  decided  by  the  sales  man- 
ager or  by  the  administration?  To  what  extent  should 
policies  regarding  advertising,  brands  and  service  be 
determined  by  general  executives  and  administrators? 

E.  Control. 

What  should  be  the  general  nature  and  extent  of  control 
of  the  sales  department  by  the  president,  general  man- 
ager, and  board  of  directors?  Does  the  budget  system 
give    sufficient    control    of    the    sales    department? 


Problem  325 

Detekmination  of  Policy  by  Administrative 

Authority-Selection  of  Sales  Manager 

The  James  Engineering  Company  owns  concessions 
under  the  patent  rights  for  U.  S.  and  manufactures  in 
small  (juantities  an  automatic  lubrication  system  for 
motor  vehicles.  With  attachments,  this  system  can 
be  adapted  to  any  of  the  cars  in  the  class  selling  at 
$1,000  or  over.  The  device  is  of  European  origin, 
having  been  successfully  applied  to  many  of  the 
famous  European  cars.  While  the  sales  in  Europe 
have  never  been  large,  the  device  has  been  in  use  long 
enough  to  assure  the  company  that  it  is  correct  from 
an  engineering  view-point  and  from  the  view-point 
of  actual  service.  The  president  and  board  of  directors 
of  the  engineering  company  are  all  men  interested 
primarily  in  engineering  and  manufacturing  activities. 
They  have  no  desire  to  establish  a  sales  organization. 
The  lubricating  systems  have  in  small  quantities  been 
sold  for  several  years,  but  never  over  1,000  systems 
in  any  one  year. 


osc.      im;()I'.ij:ms  in  sali;s  maxacikment 

The,  excess  capacity  of  the  factory  during  the  war 
was  used  for  inanufacturing  aeroplane  parts  for  the 
(^lovernnicnt.  Upon  the  cancelation  of  these  eon- 
tracts,  the  James  lOngineering  Company  found  itself 
with  an  excessive  manufacturing  capacity,  and  the 
directors  were  at  a  loss  to  know  how  to  increase  sales 
of  the  lubrication  device.  About  this  time,  they  were 
ap]Droached  by  a  certain  group,  who  proposed  to  take 
over  the  sales  of  the  lubrication  system  in  return  for 
exclusive  selling  rights  in  the  United  States.  The 
contracts,  as  finally  agreed  to,  relieved  the  engineering 
company  of  any  necessity  of  continuing  sales  efforts. 
The  sales  company,  then  formed  under  the  name  of 
the  Automotive  Sales  Corporation,  agreed  to  pur- 
chase for  resale  at  least  8,000  of  the  lubricating  systems 
each  year,  in  consideration  whereof  they  were  to  have 
■exclusive  sales  rights.  The  purchase  price  fixed  by- 
contract  was  $50  per  system,  including  attachments 
for  \'ariou8  makes  of  cars.  Payment  was  to  be  made 
upon  the  first  and  fifteenth  of  each  month  for  all  stock 
invoiced  since  the  previous  payment.  In  addition, 
the  engineering  company  was  able  to  secure  the  promise, 
incorporated  in  the  contract,  that  at  least  $30,000 
per  annum  would  be  spent  in  advertising  the  product. 

The  capitalization  of  the  Automotive  Sales  Com- 
pany consisted  of  $100,000  par  value  preferred  stock 
and  2,000  shares  common  stock  at  no  par  value: 
$70, 000  of  the  preferred  stock  was  issued,  of  which 
$20,000  was  paid  for  the  equipment,  good  will  and 
accounts  receivable  of  the  three  existing  stores.  The 
other  $50,000  was  paid  in  cash.  The  borrowing 
capacity  of  the  concern  was,  of  course,  limited,  although 
on  personal  endorsement  of  company  notes,  the 
officers  could  probably  secure  $50,000  additional. 
The  group  of  men  composing  the  sales  company  under 
this  agreement  had  been  interested  in  the  trade  in 
automotive  accessories  and  had,  for  a  year  or  two 
previous,  maintained  a  store  in  which  the  sale  of  this 
lubricating  device  was  featured.  The  company  as 
formed  took  over  this  branch  store  and  assumed  cer- 


ADMINISTRATIVE  POLICIES  587 

tain  obligations  with  reference  to  the  estabhshniont 
of  a  branch  store  in  New  York  and  another  in  Cleve- 
land. As  a  consequence,  when  the  company  was 
finally  formed  and  its  sales  headcjuarters  located  near 
the  plant  in  Cleveland,  it  had  already  three  retail 
branches:  one  in  Philadelphia,  one  in  New  York, 
and  one  in  Cleveland. 

Soon  after  taking  over  the  sales,  the  officers  of  the 
new  company  learned  that  little  care  had  been  taken 
by  the  manufacturers  to  see  that  satisfaction  w^as 
given  by  the  lubricating  S3^stems  already  sold  and 
found  that  there  was  a  great  deal  of  dissatisfaction, 
not  because  of  the  incorrectness  of  the  mechanical 
features,  of  the  system,  but  because  of  faulty  applica- 
tion of  ignorant  mechanics.  It  was  felt  that,  at  least 
until  the  device  was  simplified,  it  was  necessary  to 
take  more  than  ordinary  care  in  selecting  dealers  or 
in  distributing  the  device  to  consumers. 

(a)  No  member  of  the  board  of  directors  feels  capa- 
ble of  assuming  the  duties  of  sales  manager.  It  is 
proposed  by  a  director  that  the  company  should  en- 
deavor to  secure  a  man  already  in  the  automotive 
trade,  w^ho  has  been  successful.  It  might  be  neces- 
sary to  guarantee  a  salary  of  $10,000  to  S15,000 
per  year. 

Among  the  applicants  for  the  position  is  Mr.  Henrj^ 
Dorman.  During  a  brief  interview,  the  president 
of  the  company  was  favorably  impressed  with  his 
personalit}^  but  requested  Mr.  Dorman  to  write  a 
letter  which  might  be  referred  to  the  board  of  directors 
as  statement  of  qualifications  and  experience.  The 
letter  follows: 

Dear  Sir: 

The  purpose  of  this  letter  is  to  supplement  our  recent 
personal  interview,  and,  as  suggested  bj^  you,  I  am  out- 
lining my  selling,  sales  promotion  and  advertising  expe- 
rience, believing  that  I  have  the  necessary  qualifications 
for  the  position  of  sales  manager  in  3^our  organization. 

My  experience  in  advertising  and  sales  work  dates 
from  1910  at  which  time  I  was  connected  with  the  adver- 
tising and  selling  ends  of  one  of  the  largest  department 


oSs      im;()i;i.i:.ms  in  sali-;s  management 


stores  l)('t wccii   New    ^Oik  and  ( "liicajio,  iiaiiit'ly 
of  Hoclu'slcr. 


I  rciiiaiiicil  wiih  ihal  coiiccin  until  March  1015  and 
ai'<iuirc(l  a  \asl  amount  of  inl'oi'uuition  and  experience 
I'elative  to  retail  selliiifi;  and  advei'tisiiifj;. 

1  left  to  accei)t  ii  ixtsitioii  as  sales  promotion  uuin  with 

of  Cleveland,  one  of  thccountry's  larj^est  makers 

of  women's  outer  apparel.  My  duties  with  the  Cleveland 
conceiii  consisted  of  handling  of  all  dealer  prospects  both 
personally  and  hy  coirespondence;  preparing-  all  adver- 
tisinf<;  and  dealer  helps  for  the  dealeis'  local  use;  editing 
the  c()mi)any's  house  organ  and  acting  as  genei'al  assistant 
to  the  sales  director. 

In  Maich   191(»  1    was  offered   and   acccj)t('(l   a   position 

in  the  advertising  and  dealer  helps  di\-isi()ii  of 

RuhlxM'  Co.   of  Akron,   ( ). 

\\'hil(>  with  that  coin])any  I  did  considerable  traveling 
among  the  dealers  I'oi-  the  purpose  of  selling  them  on  the 
value  of  local  advertising;  also  to  educate  them  to  make 
use  of  the  dealer  heljis  which  were  furnished  by  the  com- 
pany. I  also  prepared  the  ])neumatic  tire  advertisements 
and  was  a  member  of  the  advertising  committee  which 
passed  on  all  matters  relating  to  the  company's  advertising 
and  new  dealer  sales  policies. 

In  addition,  I  had  supervision  of  the  company's  window 
display  division,  the  duties  of  which  consisted  of  designing 
all  window  displays,  both  for  branches  and  dealers. 

In    Fel)ruar3'    1918    I    was    offered    and    accepted    the 

position  of  advertising  manager  with  The Motor 

Corporation  of  St.  Louis,  makers  of motor  trucks. 

In  addition  to  my  duties  as  ad  man,  I  also  assisted  the  sales 
manager,  but  was  not  officially  promoted  to  the  position 
of  assistant  sales  manager  until  January  of  the  present 
year. 

My    duties   in    the    selling   organization    of    

Company  consisted  of  exactly  the  same  nature  of  work 
as  required  of  the  sales  manager,  namely:  appointing  new 
distributors  and  dealers;  handling  dealer  correspondence; 
doing  missionary  work  among  the  dealers  and  assisting 
them  in  closing  hard  sales;  estimating  potential  consump- 
tion; making  trade  investigations  and  handling  the  road 
men;  in  fact  all  of  the  various  duties  required  of  a  sales 
executive  connected  with  a  concern  which  has  an  inter- 
national distribution. 

Due  to  the  fact  that  output  is  oversold   for 

months  to  come  which  obviously  means  little  need  for  an 


\ 


ADMINISTRATIVE  POLICIES  589 

active  selling  organization,   I  left  that  concern  May   15. 
I  can  refer  you  to  any  of  the  officials  of  the  company. 

I  confidently  ])elieve  that  with  my  advertising  and 
sales  promotion  experience,  particularly  with  the  auto- 
motive and  tire  industries,  I  can  make  my  services  of  much 
value  to  your  organization,  and  if  given  the  opportunity 
where  diligent,  creative  work  will  be  appreciated,  I  will 
make  good  to  the  entire  satisfaction  of  all  concerned. 

Realizing  that  a  3^oung  and  growing  concern  is  bur- 
dened with  great  expense,  I  am  willing  to  stai't  with  your 
organization  at  a  yearly  salary  of  $.'^9()()  or  .$75  a  week, 
until  such  time  as  distri])ution  and  sales  have  reached  a 
point  where  my  services  would  be  worth  more.  In  addi- 
tion to  the  work  of  directing  the  sales,  I  should  be  pleased 
to  supervise  the  company's  advertising  until  the  services  of 
a  permanent  advertising  man  might  be  required. 

I  am  33  years  of  age  and  married. 

I  want  to  thank  you  for  your  kindness  in  granting  me 
an  interview  and  will  greatly  appreciate  anything  you  will 
do  to  have  my  application  given  consideration. 
Yours  very  truly, 

References:  (Four  officials  in  companies  with  which 
Mr.  Dorman  has  been  connected.) 

Question 
What  action  should  be  taken  upon  this  application? 


(h)  Since  the  renewal  of  the  contract  from  year 
to  year  is  contingent  upon  fulfilling  its  obligation  of 
selling  at  least  8,000  systems  annually,  the  board  of 
directors  of  the  company  nmst  determine  certain 
matters  of  general  policy.  The  financial  resources  of 
the  company  are  so  limited  that  financing  of  sales 
presents  a  serious  problem.  It  is  expected  that  the 
systems  can  be  sold  to  dealers  at  an  average  of  $75 
per  system  net,  but  such  sales  must  be  made  in  small 
lots  and  require  much  effort  both  in  effecting  sales  and 
in  securing  proper  installation.     On  the  other  hand, 


o'.io      rii(>i'.i.i:.Ms  i\  sALi';s  manacikmkm' 

the  entire;  output  would  be  tukeii  up  if  one  or  two 
larger  autonioljilc  uiuuut'ucturers  could  be  induced 
to  feature  the  systems  as  standard  equipment.  How- 
ever, the  price  which  could  he  secured  would  undoubt- 
edly be  considerably  less  than  .S75,  probably  not  over 
$55  per  system.  While  the  suggestion  has  been  made 
that  the  whole  matter  be  left  to  the  sales  manager 
to  be  appointed  who  might  dispose  of  the  8,000  sets 
as  'he  saw  fit — his  term  of  office  depending  upon  his 
success,  the  other  members  of  the  board  feel  that 
the}^  nmst  decide  this  ([uestion  because  the  type  of 
sales  manager  to  be  chosen  will  depend  upon  the 
decision. 

Questions 

1.  What  policy  as  to  sales  for  standard  or  factory 
equipment  should  be  adopted? 

2.  How   will    the    decision    influence    the    building 
of  the  sales  organization? 

3.  How  will  sales  policies  as  to  channels  of  distribu- 
tion and  credits  be  affected? 


(c)  The  manufacturing  company  has  agreed  to  replace 
systems  or  replace  defective  parts,  but  there  is  con- 
siderable cost  involved  in  having  these  parts  replaced 
by  competent  mechanics.  Customers,  under  a  guar- 
antee which  has  been  given,  object  to  paying  the 
cost  of  this  labor.  Replacement  or  repair  of  all 
outstanding  sets  would,  of  course,  be  productive  of 
good  will,  but  would  involve  considerable  expense, 
totaling  approximately  SI 5  per  system  for  such  as  are 
not  operating  properl}'.  Judging  by  experience  in  cer- 
tain limited  districts,  about  500  systems  require  replace- 
ment or  overhauling  because  of  faulty  installation. 


ADMINISTRATIVE  POLICIES  591 

Question 
Should    the    administrative   officers   give   the   sales 
manager   carte    blanche    to    adjust    complaints    under 
the  conditions? 


Problem  326 
Administrative  Policy  Affecting  Sales 

The  Euclid  Chocolate  Compaity  is  an  Ohio  corpora- 
tion which  has  been  in  business  since  1906.  Up  to 
1913  the  company  enjoyed  a  steady,  healthy  growth 
of  from  10  to  20%  of  its  volume  each  year,  the  sales 
in  1913  being  about  $450,000.  The  candy  is  sold  in 
the  territory  east  of  the  Mississippi,  about  90%  of 
the  sales  being  made  direct  to  the  retailer  and  some 
10%  through  jobbers  in  sections  where  the  company 
is  not  in  a  position  to  sell  direct. 

During  the  war  the  company  experienced  an  un- 
usual expansion,  which  reached  its  peak  in  1920  with 
sales  of  $1,253,000.  On  the  basis  of  pre-war  prices 
this  represented  about  $850,000  in  volume.  In  1920 
the  company  undertook  responsibility  through  a  long- 
term  lease  for  the  erection  of  a  new  factory  with  a 
capacity  of  about  three  times  that  of  the  old  factory. 
The  following  are  several  of  the  financial  statements 
of  the  company : 

STATEMENT  OF  FINANCIAL  CONDITION 
Assets  1909  1913  1916  1918  1919 

Real  Estate 

Machinery,  Fixtures,  etc $12,900.00      $39,192.00      $42,463  29    $40,942.81     $34,542.50 

Mercaandise 29,500.00        50,672.00        69,639.63      152,788.41      240,217.58 

Cash  &  Debts,  etc 42,700.00        93,775.00      134,966.82      162,990.02      201,210.76 

Trademarks,  Patents,  etn.  1. 

Goodwill  )  5,500.00       

.Advertising  Reserve 2,000.00       

Prepaid  Items 

Notes 8,200.00 

Securities...! 52,492.00 

$92,600.00    $183,639.00    $247,069.74    $356,721.24    $536,662.84 


-)»2        IMioHLlOMS  IN  SALES  MANACIEMKNT 

Liabilities 

Capital $45,000.00    $84,000.00    $101,100  00    $178,100.00  $205,100.00 

.Vccouiits  Payable 2U,200.00        16,223.00        20,130.02        23,040.00  50,267.80 

.Notes  Payable 18,000.00  102.500.00 

Kumlod  Debt 30,900.00        88,981.18       

KIgatiiig  Debt 18,400.00        67,984.00       

Reserve  for  Depreciation 48,000.00      

Surplus 148,044.98 

Profit  4  Less 15.432.00        34,9.39.12       30,750.00 

$92,600.00    $183,639.00    $247,069.74    $.356,721.24  $536.662  84 

'lli(^  stattMHonts  show  that  capital  was  increased 
considerably  the  year  previous  to  the  expansion  to 
provide  working  funds  and  capital  required  for  building. 
The  new  factory  was  readj^  in  the  fall  of  1920,  ])ut  by 
that  time  the  large  capacity  was  unnecessary.  The 
market  had  fallen,  so  that  only  30%  of  the  new  produc- 
tion capacity  could  be  used.  Furthermore,  the  com- 
pany suffered  large  losses  on  inventory  and  was  con- 
fronted with  large  obligations  contracted  for  with 
the  banks  in  connection  with  the  new  plant.  The 
statement  as  of  Dec.  31,  1920,  shows  the  following: 

Preferred  Common 

Stock  Stock 

Capital  stock  authorized 700,000  300,000 

Par  value  of  shares 100  100 

Number  of  shares 7,000  3,000 

Number  of  shares  authorized  out- 
standing         3,497  1,626 

Paid-in  value 349,700  162,600 


Assets 

Real  estate $ 

Plant  equipment 197,401.77 

Machinery 72,431.90 

Merchandise •.  .  .         407,386.10 

Furniture,  fixtures  and  tools 17,330.71 

Autos,  trucks  and  teams 

Notes 9,049.00 

Accounts  receivable 328,238.54 

Cash 67,288.63 

Securities 34,779.40 

Patent  rights 

Trade-marks 

Good  will 

Profit  and  loss 


$1,133,906.05 


ADMINISTRATIVE  POLICIES  593 

Liabilities 

Capital  stock $512,300.00 

Mortgages 

Accounts  payable 134,626.47 

Notes  payable 435,500.00 

Surplus 51,479.58 

Profit  and  loss 

$1,133,906.05 

At  the  present  time  the  management  finds  that  it 
has  failed  to  establish  lasting  dealer  relations.  During 
the  war  there  was  extensive  distribution,  but  no 
intensive  work  designed  to  build  up  good  will.  When 
the  slump  in  prices  came,  many  of  the  dealers  who  had 
purchased  large  quantities  of  candy  during  the  sellers' 
market  ceased  buying.  The  company  had  done  no 
advertising,  except  through  providing  store  signs  and 
window  displaj^s  for  dealers.  No  periodical  adver- 
tising had  ever  been  undertaken,  mainl}^  because  of 
the  difference  of  opinion  among  the  directors  as  to 
the  policy  to  be  adopted.  Under  the  conditions  early 
in  the  war,  it  was  felt  that  while  $25,000  or  $30,000 
per  year  might  be  expended  upon  advertising  it  was 
impossible  to  appropriate  as  much  as  $100,000  a  year. 
The  sentiment  of  the  majority  of  the  board  of  directors 
was  that  unless  $100,000  a  3'ear  could  be  spent  upon 
magazine  advertising,  it  was  folly  to  undertake  any 
advertising  at  all.  Likewise,  it  seems  that,  during 
the  period  of  expansion  when  sales  were  large  and 
money  could  be  appropriated  for  advertising,  the 
management  had  a  feeling  of  false  security  and  spent 
a  considerable  amount  of  the  large  war  profits  in 
unwarranted  expansion  instead  of  in  building  up 
consumer  good  will.  As  a  consequence,  the  companj^ 
finds  itself  in  financial  straits  where  further  borrowing 
from  the  banks  means  relinquishing  control  to  a 
bankers'  committee. 

The  price  policy  of  the  company  is  a  uniform,  one- 
price  policy,  no  concessions  being  made  for  quantity 
purchases.  The  company  has  never  adopted  the 
policy  of  giving  special  concessions  to  strategically 
located  dealers.  The  salesmen  operate  on  a  salary 
and  commission  basis. 


591        PH()IiLi:MS  IX  SALKS  MANAGEMENT 

In  view  of  tho  financial  difficulties  of  the  company, 
the  management  has  cut  down  its  sales  force.  One  of 
the  most  successful  salesmen  of  the  company,  covering 
the  city  of  New  York,  has  been  withdrawn  entirely, 
as  have  salesuKMi  in  other  districts.  Prices  have  been 
cut  radically.  The  c{)m|)any  has  undertaken,  also, 
to  manufacture  a  lower  grade  of  product  than  formerly, 
thus  departing  from  its  policy  of  selling  only  a  trade- 
marked,  high-fpiality  product.  It  was  felt  that  this 
action  was  necessary  to  meet  the  demand  of  the  public 
for  a  less  expensive  product.  M  j)resent,  the  com- 
|)any's  jiosition  is  not   imjiro\'ing. 

Questions 

1.  As  sales  manager,  what  action  would  you  suggevSt 
to  place  the  company  on  its  feet? 

2.  To  what  extent  should  the  course  of  procedure 
suggested  require  the  approval  of  the  president  and 
board  of  directors  of  the  company? 


Problem  Ml 
Scope  of  Administrative  Action 
The  Western  Railway  Signal  Corporation  capitalized 
at  $50,000—8%  preferred,  and  SI 00,000  common 
stock,  owns  the  patents  of  an  automatic,  interlocking 
block  signal  system,  which  has  been  officially  adopted 
in  luirope  on  some  of  the  imi)ortant  railroads.  It  is 
preparing  a  test  installation  of  this  device  on  a  local 
road;  but.  realizing  that  adoption  is  a  slow  process, 
the  board  of  directors  wishes  advice  on  certain 
matters  concerning  its  other  device,  known  as  the 
Automatic  Motorless  Electric  Flasher.  In  a  state- 
ment of  the  company  appears  the  following: 


I 


ADMINISTRATIVE  POLICIES  595 

This  flasher  was  dosisned  especially  for  railroad  and 
highway  signal  work.  Its  operation  consists  in  turning  on 
and  olT  automatically  the  electric  current  leading  to  one  or 
more  electric  lamps.  It  appears,  however,  that  this 
flasher  has  a  wider  field  of  application,  prominent  among 
which  is  the  electric  advertising  field,  as  well  as  light- 
houses and  buoys,  and  possibly  street  traffic  signals, 
automatic  switches,  etc. 

Advantages  of  This  Flasher 

(1)  It  has  no  motors  or  heat-resistance  units  or  other 
parts  that  would  necessitate  frequent  I'epairs,  but  operates 
on  an  electro-magnetic  pendulum  principle. 

(2)  The  making  and  l)reaking  of  the  electric  circuit 
takes  place  in  a  vacuum  tube,  resulting  in  perfectly  clean 
contacts  at  all  times,  as  these  contacts  cannot  oxidize. 

(3)  Its  operation  is  positive  and  reliable  on  account  of 
its  construction,  simplicity  and  few  moving  parts. 

(4)  The  number  of  flashes  per  minute  can  be  increased 
or  decreased  readily. 

(5)  The  number  of  circuits  controlled  can  be  increased 
or  decreased. 

(6)  The  capacity  is  200  volts — 20  amperes. 

(7)  This  flasher  can  be  adapted  for  gas  or  oil  lamps  by 
having  it  operate  a  shield  in  front  of  the  light. 

(8)  Its  work  is  noiseless. 

The  device  has  been  in  actual  service  operation  for 
two  years  on  signal  installations  and  has  proved  eminently 
satisfactory. 

The  actual  cost  of  the  flasher  specially  manufac- 
tured is  $48,  but  quantity  production  will  reduce  this 
to  $35.  The  problems  confronting;  the  Board  of 
Directors  are  as  follows: 

(1)  This  flasher  is  believed  to  be  a  splendid  means  for 
highway  crossing  signal  protection,  by  sending  red  flashes 
upon  the  approach  of  a  train  as  a  warning  along  the  high- 
way.    This  being  the  case,  it  is  desii'ed  to  know: 

(a)   What  is  the  best   method    of    ni;ii'k(>t  ing    such    a 
highway  crossing  signal? 

(6)  What  is  the  actual  sales  nuu'ket  in  this  particular 

field? 

(c)  What  percentage  of  this  business  can  we  rea.son- 

ably  expect? 


-)'.)(;        Pl{()liLi:MS  IX  SALES  MANAGEMENT 

(//)   What   (l('\i('('s  aic   l)C'iiif!;  ('xploitcd   at    present   for 

sueh   woik,   and   at    what   prices? 

{(')  \\'hat  opportunity  ofTers  exjiort  business? 

(/)    What   coinpet  it  ion  sliall   we  meet? 

(2)   It  is  ol)vious  t  hat  t  his  device  is  a|)phcal)le  to  electric 
sign   advert isint;. 

(fl)  What  is  the  sales  market  and  what  percentage  can 
wc  reasonal)ly  expect  to  obtain  of  this  business? 

(b)  What  is  the  l)est  method  of  selling  this  flasher — 
that  is,  through  specialty  sal(\smen,  joljbers,  machinery 
agents,  (>tc.? 

(c)  What  conipct  it  ion  shall  we  meet? 

Questions 

1.  Are  these  points   properly   within    the    scope    of 
administrative  action? 

2.  To  what  extent  does  the  information  called  for 
bear  upon  administrative  decision? 

3.  In  a  large  concern,  how  many  of  these  matters 
would  be  left  to  the  decision  of 

(a)  sales  manager; 

(6)  president; 

(c)  board  of  directors? 


Proijlem  3!28 
Sales  Development  as  Basis  for  Stock  Issue 

The  following  is  taken  from  a  stock  circular  issued 
by  a  New  York  dealer  in  investment  securities  offering 
stock  of  the  Ritz  Chemical  Corporation  at  par. 

Dear  Sirs : 

Incorporation: 

The  Ritz  Corporation  was  incorporated  under  the  laws  of 
the  State  of  New  York,  on  Oct.  19,  1920,  and  has  an  author- 
ized capital  stock  of  Fifty  Thousand  (50,000)  shares  of 
Five  ($5.00)  Dollars  par  value,  all  of  which  has  been  issued. 


ADMINISTRATIVE  POLICIES  597 

Business: 

The  Compaii}'  is  an  ainalj^ainatioii  of  its  business  with 
the  entire  business,  assets,  good-will,  trade  marks,  formulae 
and  outstanding  accounts  of  the  following  three  companies: 

J.  W.  EDMONDS  &  SONS,  a  co-partnership,  doing 
business  for  the  past  twenty-nine  years,  maiuifacturers 
of  the  celebrated  Edmonds'  Electric  Metal  Polisii,  dis- 
tributed wherever  metal  polish  is  known.  The  business 
of  this  concern  shows  excellent  earnings,  which  can  be 
materially  augmented  by  the  increased  facilities,  reduced 
manufacturing  costs  and  sales  expansion  made  possible 
through    this   amalgamation. 

SLATER  LABORATORIES,  manufacturers  of  phar- 
maceuticals, extracts,  etc.,  and  the  owner  of  many  valuable 
formulae,  which  under  this  financing  can  be  made  to  con- 
tribute substantially  to  the  earnings  of  the  corporation. 

SCHERER,  BURNELL  &  SCHERER,  INC.,  a  New 
York  corporation,  organized  primarily  for  the  manu- 
facture, by  a  new  process,  of  a  non-streaking,  readily 
soluble  lavmdry  blue  of  extremel}^  high  cleansing  and 
bleaching  qualities,  known  as  "Tru-Blu,"  for  export. 
This  company  did  a  business  of  some  Two  Thousand 
($2,000.00)  Dollars  per  month,  and  has  entered  into  a 
valuable  contract  with  a  large  exporter,  having  representa- 
tion in  21  foreign  countries,  covering  the  distribution  of 
its  laundry  blue,  to  the  exclusion  of  all  others.  The  con- 
tract runs  for  eleven  -years,  and  as  an  indication  of  its 
value,  if  only  the  minimum  guaranteed  amounts  provided 
in  the  contract  are  taken  thereunder,  means  an  annual 
net  income  sufficient  to  pay  a  handsome  dividend  on  the 
entire  issue  of  stock. 

In  addition,  it  is  now  negotiating  for  the  agency  in  this 
country  for  foreign  dyes  and  ultramarine  blue.  The 
securing  of  this  agency  will  enable  it  to  secure  its  raw 
products  more  cheaply,  ol)tain  commissions  for  the  sale 
in  this  country  of  these  products  and  thus  materiallj^ 
increase  its  income. 

Pending  the  return  of  normal  exchange  and  export 
conditions,  this  company  has  entered  into  the  domestic 
field,  and  in  addition  to  luimerous  small  customers,  has  on 
its  books  the  following : 

John  Wanamaker,  Philadelphia,  Pa. 
Strawbridge  &  Clothier,  Philadelphia,  Pa. 
Lit  Brothers,  Philadelphia,  Pa. 
Thomas  Martindale,  Philadelphia,  Pa. 
Baltimore  Bargain  House,  Baltimore,  Md. 


r)9s      i'I{()H1j:ms  l\  sali:s  ma.xagivMKXT 

Djiiiicl  H('(>V(>s,  Inc.  (ISO  stores) 
S.  Krcsjiic  Stoi'cs 
W.  \{.  ( Iracc  it  ( 'ompan.x' 
1{.  (  '.  Williams  it  ( '()iiii)aii>' 
()ii('()nta  Wholesale  (iroceiv  ("oiiipaiiy 
and  iuaii>'  otliei'  well  known  films. 

Scherei'.  Hurnell  iV:  Sclierer,  Inc.,  also  controls  i'oi-niulae 
for  otliei-  valuahle  products,  the  manufacture  of  which 
has  not  been  hej^un,  hut  which  should  provide  additional 
income  to  t  he  companx'. 

In  addition  to  the  loic^oinji,  the  liitz  ( 'hemical  Corpoi'a- 
tion  has  accpiired  sole  rifi;hts  to  the  following  well  known 
trade  marks:  "  ( irevhound,"  ".Jiffy,"  and  "Speedo," 
togelliei'  with  custoineis"  lists,  jiood-will,  foi'mulae,  etc. 

Thi'oujih  the  research  of  its  chief  chemist  (who,  it  mip;ht 
he  said,  is  responsible  for  the  formuhi?  of  very  many  of  the 
best  known  chemical  pioducts  in  this  hst  on  the  market) 
and  the  acquisition  of  the  above  enumerated  formulae,  this 
company  is  marketing  under  its  "R-IT-Z"  trade  mark  a 
100%  line  of  chemical  products  that  excels  any  other  line 
on  the  market.  This  line  comprises  a  complete  line  of  auto 
specialties,  which  are  sokl  to  garages,  auto  accessory  and 
hardware  stores,  as  well  as  hotel,  restaurant,  household  and 
factory  suppliers  and  some  painters'  and  plumbers'  supplies. 

A  list  of  the  products  now  manufactured  is  shown  below: 

Auto  Specialties: 
R-IT-Z  Bodv  Polish 
R-IT-Z  Liquid  Metal  Polish 
R-IT-Z  Paste  Metal  Polish  • 
R-IT-Z  Bodv  Cleaner 
R-IT-Z  Top  Dressing 
R-IT-Z  Metal  Polish 
R-IT-Z  (lasket  Cement 
H-IT-Z  Carbon  Remover 
R-IT-Z  Tire  Paint 
R-IT-Z  Tai-  Remover 
R-IT-Z  Wind  Shield  Paste 
R-IT-Z  Hand  Paste 
R-IT-Z  Anti-Freeze  Compound 
R-IT-Z  Radiator  Cement 
R-IT-Z  ^'alve  Grinding  Compound 
IMT-Z  Clutch  and  Belt  Compound 

Hotel,   Restaurant  and  Household  Supplies: 
IMT-Z  Floor  Oil 
IMT-Z  Copper  Polish 
R-IT-Z  Liquid  Metal  Polish 


ADMINISTKA'JIVK  POLICIES  599 

R-IT-Z  Counter  Top  Oil 

R-IT-Z  Dance  Floor  Wax 

R-IT-Z  Silver  Polish 

R-IT-Z  Soda  Fountain  Cream  Polish 

R-IT-Z  Knife  Cleaning  Polish 

R-IT-Z  Linoleum  Cleaner  and  Reviver 

R-IT-Z  Furnituiv  Polish 

R-IT-Z  Roach  Powder 

R-IT-Z  Rug  and  Carpet  Cleaner 

R-IT-Z  Wall  Paper  Cleaner 

R-IT-Z  "  Brush- Renu" 

R-IT-Z  Disinfectant 

R-IT-Z  Drain  Pipe  Solvent 

R-IT-Z  Washing  Machine  Powder 

R-IT-Z  Crude  Chemicals 

By  reason  of  the  location  of  its  plant  at  Newark,  New 
Jersey,  with  its  excellent  railroad  and  tidewater  facilities, 
and  with  a  good  class  of  labor  readily  available  at  all  times 
at  reasonable  wages,  in  addition  to  its  extremely  low  over- 
head expense,  this  company  is  in  a  position  to  produce  and 
sell  better  goods  more  cheaply  than  its  competitors. 

Management: 

The  management  is  extremely  conservative  and  highly 
competent  to  conduct  the  affairs  of  the  corporation,  having 
successfully  managed  other  propositions  of  similar  nature 
for  many  years. 

Estimated  Earnings: 

The  sale  of  only  one-quarter  of  the  present  daily  capacity 
production  of  its  leading  products  alone  would  mean  a  net 
daily  income  of  $125. 

In  addition,  the  present  machinery  can  produce^  at  the 
same  time  all  of  the  other  products  sufficient  in  quantity  to 
add  at  least  $25  to  $50  daily  income,  to  be  conservative,  or 
total  daily  earnings  of  $150  to  $175  a  day. 

Based  on  the  foregoing,  a  conservative  estimate  of 
earnings,  figured  at  todav's  costs  for  raw  materials,  would 
be  from  $4,000  to  $5,000  per  month,  or  from  $40,000  to 
$50,000  yearly,  or  a  return  of  20%  on  the  investment. 

Purpose  of  Issue: 

The  purpose  of  this  issue  is  to  further  impiove  its  facilities 
in  order  to  reduce  costs,  develop  its  sales,  create  a  national 
sales  organization,  properly  advertise  and  distribute  its 
products  and  thus  increase  its  business  and  profits  to  its 
stockholders. 

Yours  very  truly. 


GOO       PROBLEMS  IN  SALES  MANAGEMENT 

Questions 

1.  Assimiiiiji  lliat  certain  economies  may  l)e  secured 
in  production,  is  the  consolidation  likely  to  be  able 
to  effect  larp;e  economies  in  distrihutinj!;  its  product? 

2.  Ls  the  information  p;iven  sufficient  for  the  in- 
vestor? 

3.  Is  it  coiH']usi\-e  from  the  \'ie\v-point  of  the 
investor? 

4.  Are  the  de\elopment  of  sales,  creation  of  national 
sales  orp;anization  and  advertising;  proper  purposes  for 
stock  issue? 


Problem  329 

Decentralization  of  Sales  Or(;anizations  in 

Industrial  Consolidation 

The  Glidden  Company  was  reorganized  in  1919  as  a 
consolidation  of  the  following  companies :  The  Glidden 
Co.  of  Cleveland,  Ohio;  The  Cilidden  Co,  of  Texas; 
The  Glidden  Co.  of  INIassachusetts;  The  Linseed  Oil 
Mill  Co.  of  St.  Louis;  The  Glidden  Nut  Butter  Co.; 
The  Adams  and  Elting  Co.  of  Chicago;  The  American 
Paint  Works  of  New  Orleans;  T.  L.  Blood  <fe  Co.  of 
St.  Paul,  Minnesota;  The  Campbell  Glass  and  Paint 
Co.  of  St.  Louis;  The  Forest  City  Paint  and  Varnish 
Co.  of  Cleveland;  The  Nubian  Paint  and  Varnish  Co. 
of  Chicago;  The  Glidden  Co.  of  California;  The 
Glidden  Co.,  Ltd.,  Toronto,  Canada;  The  Heath  and 
Milligan  Manufacturing  Co.,  Chicago;  The  Twin  City 
Varnish  Co.,  St.  Paul;  The  A.  ^^'ilholm  Co.,  Reading, 
Pennsylvania. 

According  to  the  description  in  its  published  reports: 

The  American  Paints  Works  of  New  Orleans,  in  addition 
to  supplying  the  Southern  States  with  paints  and  varnishes. 


ADMINISTRATIVE  POLICIES  601 

enjoys  a  very  large  export  trade  with  Mexico,  Cuba,  Porto 
Rico  and  other  countries  of  Latin  America.  The  Campbell 
Glass  &  Paint  Company  of  St.  Louis  and  Kansas  Cit}^ 
supplies  the  Mississippi  Valley  and  the  Southwest  with  a 
full  line  of  paints  and  varnishes.  The  Glidden  Company  of 
California,  located  in  San  Francisco,  succeeded  to  the 
business  of  Whittier-Coburn  Company  and  manufactures 
and  deals  in  paints  and  oils.  The  Glidden  Co.,  Ltd.,  of 
Toronto,  does  a  large  business  in  Canada  and  also  a  large 
export  business.  The  Heath  &  Milligan  Manufacturing 
Company,  Chicago,  was  formerly  controlled  by  the 
National  Lead  Co.;  this  company  has  been  engaged  in  the 
manufacturing  and  supplying  of  agricultural  imjilement 
paints  to  the  International  Harvester  Corporation  and 
other  similar  organizations;  also  in  the  manufactui'ing  of 
house  paints  and  other  paints  and  varnishes.  The  Twin 
City  Varnish  Co.  has  been  engaged  in  supplying  to  manu- 
facturers of  tin  cans,  used  for  food  containers,  a  special 
enamel  used  to  process  the  tin  plate.  The  A.  Wilhelm  Co. 
of  Reading  manufactures  fine  dry  colors  used  in  the 
printing  ink,  lithographic  and  allied  trades;  also  manufac- 
tures dry  colors  for  use  by  paint  manufacturers.  Glidden 
Nut  Butter  Co.  operates  plant  at  Chicago  having  capacity 
of  thirty  tons  of  nut  butter  per  day. 

In  addition  to  the  plants  of  the  above  companies, 
company  owns  plants  in  Cleveland,  O.,  and  Reading,  Pa., 
for  the  manufacture  of  arsenical  poisons,  such  as  Paris 
Green,  arsenical  sheep  and  cattle  dips  and  other  products 
used  by  farmers,  fruit  and  tobacco  growers,  etc.,  and 
controls  through  ownership  of  common  stock  the  Glidden 
Stores  Co.,  an  Ohio  corporation  operating  a  chain  of  retail 
paint  stores  throughout  the  country.  Company  is  the 
owner  of  several  valuable  trade  names,  such  as  "Jap-a-lac," 
"Nev-a-rust,"  "  Ad-el-ite,"  etc.  The  expoi't  department  is 
located  in  New  York. 

Any  consolidation  of  this  type  is  confronted  with 
the  problem  of  securing  the  greatest  benefit  of  centrali- 
zation of  control  of  sales  and  distribution  of  product 
without  nullifjdng  that  benefit  by  sacrificing  good  will 
attaching  to  the  constituent  companies.  In  absorb- 
ing the  various  concerns,  the  policy  finally  ado]:)ted 
was  that  of  allowing  subsidiaries  to  retain  their  own 
names  and  branded  products,  while  endeavoring  to 
secure  some  of  the  benefits  of  consolidation  through 
representation    of    some    of    the    factories    upon    the 


(iOL'      pi{()HI.i;ms  in  salks  management 

boiinl  of  (liroftors  and  through  four  regioiud  directors 
rosponsihlo  to  the  executive  coimiiittcu'  consisting  of 
tlic  picsidciit ,  \ic(>-i)i'esident  iind  treasurer.  The 
14  factories  are  grouped  acconhng  to  location  under 
these  regional  directors,  each  factory  in  charge  of  a 
general  manager. 

Questions 

1.  Should  the  j)lan  have  been  adopted? 

2.  How  would  the  sales  organization  of  the  differ- 
ent plants  be  affected  if  it  were  decided  that  a  central 
sales  organization  should  be  created  with  headquarters 
in  Chicago? 


Puoui.KM  330 

Organization  of  Separate  Corporations  to 
Handle  Sales 

The  Arlington  Motors  Corporation  has  since  1917 
been  engaged  in  the  manufacture  of  motor  trucks  in 
a  suburb  of  Chicago.  Recently  the  proposal  has  been 
presented  to  the  board  of  directors  to  organize  a 
second  corporation  for  handling  sales  and  a  third  to 
finance  the  sales. 

The  considerations  urged  in  fa\or  of  forming  three 
corporations  were  particularly  the  financial  benefits 
and  the  advantages  to  be  gained  from  the  specializa- 
tion of  functions. 

A  large  amount  of  capital  is  required  for  financing 
automobile  manufacturing  and  distributing.  It  is 
asserted  that  it  will  be  possible  for  the  Arlington 
officers  to  secure  more  capital  with  which  to  carry  on 
the  business  through  the  formation  of  three  separate 
companies,  each  of  which  offers  a  fairer  rate  of  return 
on  capitalization  than  could  be  secured  through  one 
company.     The  manufacturing  plant   with   the  large 


ADMINISTRATIVE  POLICIES  603 

amount  of  equipment  and  material  that  must  be  carried 
called  for  much  capital.  The  sales  department  must 
me(3t  the  expense  of  establishing  and  maintaining 
numerous  sales  and  service  branches,  maintaining  a 
fleet  of  demonstration  trucks,  the  carrying  of  an 
enormous  stock  of  parts  in  its  branches  and  stations. 
Lastly,  the  financing  of  sales  requires  ample  capital 
because  practically  everyone  who  buys  a  truck  buys 
it  on  a  time  basis,  even  when  able  to  make  cash  pay- 
ment. The  handling  of  the  automobile  paper  con- 
nected with  these  transactions  offers  a  field  wherein 
a  separate  company  can  make  a  good  income  from  the 
interest  on  the  paper,  while  at  the  same  time  the  man- 
ufacturing and  sales  company  is  relieved  of  the  spe- 
cialized work  of  looking  after  this  part  of  the  financial 
operations. 

In  general  the  three  corporations  would  enable 
a  specialization  in  each;  the  sales  corporation  being 
left  free  to  devote  all  its  attention  to  the  selling  field 
and  service  work.  Further,  the  presence  of  a  separate 
company  between  the  manufacturers  and  the  dealer 
or  consumer  is  thought  to  give  more  ecjuitable  relations 
with  all  than  is  gained  where  the  manufacturer  comes 
in  direct  contact.     The  sales  company  acts  as  a  buffer. 

All  three  corporations  should  be  organized  on  a 
profit-making  basis  in  contrast  to  the  formation  of 
separate  companies  in  some  cases  for  legal  purposes 
alone.  No  one  company  should  control  either  of 
the  others  except  insofar  as  there  are  stockholders 
interested  in  the  control  of  all  of  the  corporations. 

Trucks  are  to  be  manufactured  by  the  production 
company  and  delivered  to  the  sales  company  on  a  cash 
basis.  This  is  similar  to  the  procedure  of  other  com- 
panies otherwise  organized,  who  ship  their  cars  to 
regional  agents  on  sight  draft  with  bill  of  lading 
attached.  The  sales  company  disposes  of  the  cars, 
taking  paper  for  a  large  part  of  the  value.  Sales  are 
made  in  either  of  two  ways.  In  some  states  the  truck 
is  given  to  the  buj^er  on  a  conditional  bill  of  sale;  in 
other  states  the  title  passes  and  the  comi)any  has  a 


004      im{()B1.i:m.s  l\  sali:s  aianac;emknt 

niortfia^c  on  the  truck.  Tlic  note  {^i\en  by  the  cus- 
tomer hears  a  lixed  rate  of  interest,  and  he  must  at 
the  same  time  pay  a  caiiying  charge  covering  fire, 
theft,  and  hai)ihty  insui'aiice. 

It  is  inteiuh'd  tliat  the  sales  company  sell  the  paper 
which  it  tai<es  to  tlie  ArHngton  Guarantee  Discount 
Corporation  at  a  small  discount,  and  that  the  latter 
hold  the  pajier  until  matui-ity.  The  paper  may  be  in  the 
form  of  a  single  note  on  which  periodic  payments  are 
noted,  or  a  number  of  sej)arate  notes  may  be  given  for 
the  payments  as  they  fall  due.  The  latter  method 
is  favored  by  this  companj-,  though  the  legal  status 
t)f  the  two  methods  is  practically  the  same. 

Questions 

1.  Are  the  arguments  for  the  formation  of  separate 
corporations  conclusive? 

2.  Are  the  objects  attained  if  the  controlling 
stockholders  in  each  are  identical? 

3.  What  legal  advantages  are  there  in  organizing 
separate  sales  corporations'.^ 

4.  Does  such  organization  limit  the  activities  of 
the  sales  department? 


BIBLIOGRAPHY 


BIBLIOGRAPHY 

Books,  periodicals,  repoits  and  articles  dealing  more  or 
less  fully  with  various  phases  of  sales  management  are 
listed  in  this  bil)lioT;raphy.  No  attempt  has  been  made  to 
give  an  exhaustive  list  of  jirinted  material  upon  selling; 
nor  are  statistical  sources,  oi-  sources  of  data  ui)on  individual 
industi'ies,  included. 

Rooks 

J.  O.  Aspley,  Modern  Sales  Manaaetnent  Practice.^,  Dartnell 
Corporation.  Modern  Sales  Organization,  Dartnell  Cor- 
poration. 

W.  R.  Basset,  Accounting  as  an  Aid  to  Business  Profits, 
A.  W.  Shaw  Company. 

W.  C.  Brinton,  Graphic  Methods  of  Presenting  Facts,  Engi- 
neering Magazine. 

N.  A.  Briscoe,  Fundamentals  of  Salesmanship,  D.  Appleton 
&  Company. 

H.  S.  Bunting,  The  Elementary  Laws  of  Advertising  and  How 
to  Use  Them,  Novelty  News  Press.  The  Preminm  Sys- 
tem of  Forcing  Sales:  Its  Principles,  Laws  and  Rises, 
Novelty  News  Press.  Specialty  Advertising;  The  New 
Way  to  Build  Business,  Novelty  News  Press. 

Butler,  DeBower,  and  Jones,  Marlceting  Methods,  Alexander 
Hamilton  Institute. 

E.  E.  Calkins,  Business  of  Advertising,  Doul)leday,  Page  & 
Company. 

P.  T.  Cherington,  Advertising  as  a  Business  Force,  Double- 
day,  Page  &  Company. 

A.  H.  Church,  The  Science  and  J'rartice  of  Management, 
The  Engineering  Magazine. 

S.  A.  Cody,  How  to  Deal  with  Human  Xature  in  Business, 
School  of  English,  Chicago. 

M.  T.   Copeland,   Business  Statistics,   Haivai-d   University 

Pi-ess. 
M.  T.  Copeland,  Marketing  ProhUnis,  A.  W.  Shaw  (V)mi)any. 

607 


008       PROBLEMS  IX  SALES  MANAGEMENT 

("uitis  l'ul)li-liiiifi  ("oinpaiiy,  Merchandising  of  Automobile 
Accessories.  Merchandising  of  Automobiles.  Merchan- 
dising of  Textileji.  Selling  Forces.  The  Farm  Tractor 
Market. 

A.  S.  D('\viii<i,  Th(  Fimnir/dl  I'nlici/  of  ('orjKiratiofis,  I{(jiiald 
Press. 

Iliiji'd  Diciiicr.  Fdcl'irii  Orgnnizotion  and  Administration, 
Mc(  Iraw-Hill  l^ook  ( 'oiiipaiiw 

A.  W .  Douglas,  Merchandising,  MacMillaii. 

A.  W.  I)c)U{j;las,  Merchandising  Sitidies  of  the  States,  Mac- 
inillai). 

A.  W.  D()u<>las,  Traveling  Salesmanshij),  Macmillan. 

J.  ('.  Duncati,  Principles  of  Industrial  Mamigi  nient.  I).  (". 
Apploton  A:  Compai!>-. 

C.  S.  Duncan,  Marketing:  Its  Problems  and  Methods,  D.  C. 
Applet  on  &  Company. 

R.  P.  Ettingor  and  D.  E.  Golieb,  Credits  and  Collections, 
Prentice-Hall,  Inc. 

N.  C.  Fowler,  How  to  Sell,  A.  C.  McCIurg  «t  Company. 

J.  G.  Frederick,  Business  Research  and  Statistics,  D.  Appleton 
&  Company. 

J.  G.  Frederick,  Modern  Salesmanagement,  D.  Appleton  & 
Company. 

W.  E.  Freeland,  Coordination  of  Sales  with  Scientific  Produc- 
tion, Taylor  Society. 

C.  B.  Going,  Principles  of  Industrial  Engineering,  McGraw- 
Hill  Book  Company. 

L.  Greendlinger,  Financial  and  Business  Statements,  Alex- 
ander Hamilton  Institute. 

J.  E.  Hagerty,  Mercantile  Credit,  H.  Holt  ct  Company. 

Harvard  University  Graduate  School  of  Business  Admin- 
istration, Bureau  of  Business  Research  Bulletins,  especially 
the  following: 

Harvard  System  of  Accounts  for  Shoe  Wholesalers. 
Methods  of  Paying  Salesmen  and  Operating  Expenses 
in  the  Wholesale  Grocery  Business  in  1918.  Operating 
Accounts  for  Wholesale  Grocers.  Operating  Expenses  in 
the    Wholesale   Grocery   Business    in    1919.     System    of 


BIBLIOGRAPHY  609 

Accounts  for  Shoe  Wholesalers.  Sysleiti  of  Operating 
Accounts  for  Wholesale  Grocers.  The  Wholesale  Grocery 
Business  in  January  1921 . 

N.  A.  Hawkins,   The  Selling  Process,  Nerval  A.  Hawkins. 

H.  W.  Hess,  Productive  Advertising,  J.  B.  Lippincott  Co. 

C.  F.  Higham,  Scientific  Distribution,  London. 

H.  L.  Hollinsworth,  Advertising  and  Selling,  D.  Apploton  & 
Company. 

S.  R.  Hoover,  The  Science  and  Art  of  Salesmanship,  Mac- 
niillan. 

C.  W.  Hoyt,  Scientific  Sales  Management,  George. B.  Woolson 

&Co. 

P.  W.  Ivey,  Elements  of  Marketing,  Ronald  Press. 

A.  P.  Johnson,  Library  of  Advertising ,  Chicago  University  of 
Connnerce. 

E.  D.  Jones,  Administration  of  Industrial  Enterprises, 
Longmans,  Green  &  Co. 

J.  G.  Jones,  Salesmanship  and  Sales  Management,  Alexander 
Hamilton  Institute. 

D.  S.  Kimball,  Principles  of  Industrial  Organization, 
McGraw-Hill. 

E.  E.  Lincoln,  Problems  in  Business  Finance,  A.  W.  Shaw 

Company. 

J.  O.  McKinsey,  Budget  Making  and  Control,  Ronald  Press. 

Marshall  and  Lyons,  Readings  in  Business  Management, 
Chicago  University  Press. 

William  Maxwell,  //  /  Were  Twenty-One,  J.  B.  Lippincott 
Co.  Salesmanship,  Houghton  Mifflin  Co.  Training  of  a 
Salesman,  J.  B.  Lippincott  Co. 

Charles  A.  Meyer,  Mercantile  Credits  and  Collections,  Mac- 
millan. 

C.  T.  Murchison,  Resale  Price  Maintenarice,  Columbia 
University. 

National  Salesmen's  Training  Association,  The  Art  and 
Science  of  Selling,  8  volumes. 

J.  B.  Opdycke,  Advertising  and  Selling  Practice,  A.  W.  Shaw 
Company. 


GIO        1'1U)BLEMS  IN  SALES  MANAGEMENT 

Park  and  Mai  hew  son,  Acceptances;  TraHc  and  Bankers, 
1).  (".  Applcton  &  ('oirij)aiiy. 

\\.  A.  I'rciulcrnast,  Credit  <ni<l  Its  {'s(s,  I).  ('.  Appleton  & 
C'oini)aiiy. 

CI.  P.  Putnam's  Sons,  Unndtxiok  of  Adrrrtisiny  and  Selling. 

Robert  Ilamsa}',  I'Jjjfcrtivc  Jloasr  Onjaits,  D.  (\  Appleton  & 
Company. 

lionald  Press,  Mercantile  Credits. 

Tlionias  R  ussel  I,  ('o//<m^'/f7V//.l</rc/7/.s//(  </,(}.  P.  Putnam's  Sons. 

\V.   I).  Scott,   Injhiencing  Min   in  Business,  Ronald  Press. 

A.  W.  SiuiAv,  An  Approach  to  Business  Problems,  Harvard 
University  Press. 

A.  W.  Shaw,  (Some  Problems  in  MarJ;et  Distribution,  Har- 
\ard  University  Press. 

A.  W.  Shaw  Companj',  Shaw  Sellinji  Series,  5  volumes. 
Handling  Salesmen  at  Lower  Cost.  Organizing  for  In- 
creased Sales.  More  Sales  Through  Advertising.  Good 
Will,  Trade-Marks,  and  Unfair  Trading.  Graphic  and 
Statistical  Sales  Helps 

Daniel  Starch,  Advertising,  Scott,  P'oresman  &  Company. 

H.  S.  Tipper,  The  Xew  Business.  Douljleda}-,  Page  &  Com- 
pany. 

Tipper,  Hollinjiworth,  Hotchkiss,  and  Parsons,  Advertising; 
Its  Principles  and  Practice,  Ronald  Press. 

Herbert  Watson,  The  Knack  of  Selling,  A.  W.  Shaw  Com- 
pany. 

H.  B.  Twyford,  Storing:  Its  Economic  Aspects  and  Proper 
Methods,  D.  Van  Nostrand  Co. 

L.  D.  H.  Weld,  The  Marketing  of  Farm  I'roducts,  Macmillan 
Co. 

Harold  Whitehead.  Principles  of  Salesynanship ,  Ronald 
Press. 

H.  T.  Wright,  Organization  as  Applied  to  Industrial  Problems, 
J.  B.  Lippincott  &  Co. 

Periodicals,  Reports,  Special  Publications. 

Advertising  and  Selling. 

American  Economic  Review. 

Annals  of  the  American  Academy  of  Political  atul  Social 
Science. 


BIBLIOGRAPHY  611 

Associated    Advertising.     Associated    Advertising    (^lubs    of 
the  World. 

Bulletins  of  the  National  Wholesale  Grocers'  Association. 

Bulletins  of  the  United  States  Chamber  of  Commerce. 

Bulletins  of  the  Taylor  Society. 

Federal  Reserve  Bulletin. 

J udicious  A dver Using . 

Printers'  Ink. 

Printers'  Ink  Monthly. 

Publications  U.  8.  Government.      Department  of  Agricul- 
ture.    Department  of  Commerce. 

Publications.     American  Acceptance  Council. 

Reports.     Alexander  Hamilton  Institute. 

Reports.     The  Business  Bourse,    Inc. 

Reports.     The  Dartnell  Corporation,  Chicago. 

Practical  Bofius  PUinx  for  Cotnpensating  Salesmen. 

Sales  Manual  Suggestions  and  Ideas. 

IIoiv  21  Concerns  Reduce  Salesmen's  Expenses. 

Stunts  that  Put  Life  into  a  Sales  Convention! 

Tests  and  Methods  for  Selecting  Salesmen. 

Sales  Control  Methods  for  Getting  Full  Results. 

One  Hundred  Sales  Contest  Ideas. 

Sales  Record  and  Order  Systems  in  General  Use. 

Salesmen's  Compensation;  Average  Earnings   and  Salary 
Increases. 

Plans  for  Increasing  Sales  Call  Efficiency. 

Profit  Sharing  Plans  for  Salesmen  and  Sales  Managers. 

Analysis  of  Sales  Cost  Practices  by  Lines  of  Business. 

Sales  Managers'  Letters  to  Salesmen. 

Graphic  Charts  for  Picturing  Sales  Facts. 

Salesman's  Auto  Allowances  and  Upkeep  Practice. 


612        PROBLEMS  IN  SALES  MANAGEMENT 

h'f  rniiliiKi,  Trainitig  (uid  Dcvditjrinij  S(ilcf<vicn. 

Quota  riaii.s  for  StinniUUiity  »Sri/c.s. 

Prices,  Discounta  and  Sales  Agreements. 

Investigation  of  260  Advertising  Agencies. 

New  Census  Statistics  Arranged  for  Soles  Ajtalysis. 

Fifty-tiro  Letters  to  Solcsmen. 

Report  Forms  <uid  Check-up  Methods  for  Salesmen. 

Digest  and  Revieir  of  Fortij  Successful  Soles  Moiiuals. 

One  Hundred  Ideas  for  Mainng  Sales  Contests  Faij. 

Salesman's  Salari/  and  Connnission  Increases  Since  1914- 

New  Data  on  Salesmen's  A  utomobile  A  llowances  and  Upkeep. 

Forced  Draft  Methods  for  Stimulating  Sales. 

Sales  Expense  Control  through  Scientific  Budgeting. 

Sales  Management. 

The  Sales  Manager. 

System 

Administration' 

Feb.  1921,  page  195,  The  Sales  Budget  for  Business. 

May  1921,  page  585,  Statistics  in  Business. 

May  1921,  page  593,  Practical    Organization     of     Industry. 
Part  L 

May  1921,  page  624,  Special  Steps  in  Stores  Control. 

May  1921,  page  647,  Budgetary  Control  of  Plant  and  Equip- 
ment. 

May  1921,  page  659,  Why  a  Sales  Tax? 

June  1921,  page  9,  The  Value  of  Statistical  Information. 

June    1921,   page   789,   Practical  Organization    of  Industry. 
Part  n. 

July    1921,   page    14,   Budgeting   the   Advertising   Program. 

July  1921,  page  23,  Commercial  Research. 


BIBLIOGRAPHY  613 

Journal  of  Commerce  and  Commercial  Bulletin 
May  13,  1920,  Afi.sociation  to  Wage  Wai'  on  Cancellations. 
June  23,  1920,  What  Wholesalers  Will  Do  in  Present  Market. 
Oct,  2,  1920,  Cancellations  to  Cease  in  Textiles. 
Nov.  20,  1920,  Waste  of  Careless  Traffic  Practices. 

Printers'  Ink 

April  14,  1914,  Bailding  the  Catnlog  to  Meet  Market  Condi- 
tions. 

April  23,  1914,  Catalogues  that  Fit  the  State  of  Mind  of  the 

Consumer.  ^ 

April,  30,  May  7,  May  14,  1914,  An  Investigator's  Report  on 
Exclusive  Agencies. 

April    30,    1914,    Munsing wear's   Successful   Cultivation    of 
Dealer. 

June  11,  1914,  Design  Piracy  Prevents  Use  of  Advertising. 

June  18,  1914,  Unsoundness  of  Quantity  Discount. 

July  9,  1914,  The  Diary  of  a  Sales  Manager. 

July  9,  1914,  "Inside''  Discounts  which  Hurt  Business. 

July  9,  1914,  How  Market-data  Built  a  Catalogue. 

July  16,  1914,  Help  One  Retailer  Asks  for. 

July  23  and  July  30,  1914,  The  (ruarantcc  as  an  Advertising 
Factor. 

Nov.  19,  1914,  Vital  Information  Advertisers  May  Get  from  the 
Government  by  Asking  for  it. 

Jan.  28,   1915,  Jobbers  Should  Trim   Their  Sales  to  These 
Trade  Winds. 

Feb.  14,  1915,  Skinner's  Satin's  Pioneer  Solution  of  Difficult 
Selling  Problems. 

April  15,  1915,  Getting  More  Out  of  Salesmen  on  Commission. 

April  15,  1915,  Whe7i  Sampling  is  Profitable  and  When  it  is 
Not. 

Dec.  23,  1915,  Why  Trenton  Potteries  Dropped  Meaningless 
List  Prices. 


614        PROBLEMS  IN  SALES  MANAGEMENT 

Jan.    20,    191G,    Graphic    Salef^    Pictures    Ouif    Amdiizc    the 
Busines!^. 

Fct).   17,   1!)|(),  KrcpiiKj  F/(l(IM(i/i<i(iersfr()t/}"(roin(jStale". 

May  4,    lOKl,    Teatn-work   between   Advertiser  and  Agency. 

June  29,  1910,  How  "Wear-Ever's"  Direct  Sales' Boost  Sales 
through  Dealers. 

July  27,  1916,  The  Organization  of  the  Sales  Department  in 
Relation  to  Customers. 

Sept.  21,  1916,  How  the  Calumet  Baking  Powder  Company  of 
Chicago    Kept    Up   Personnel  of  Demonstration   Crews. 

Nov.  16,  1916.  The  Use  of  the  Sales  Manual. 

Jan.  4,  1917,  Sales  Conventions  that  Prove  Worth  While. 

Feb.  15,  1917,  Handling  Inquiries  in  a  Way  that  Built  Up  a 
National  Market. 

July  12,  1917,  Making  the  Sales  Convention  Yield  Profits  for 

the  Year  After. 

Sept.  20,  1917,  Morris  &  Company's  Plan  of  District  Sales 
Conventions. 

Sept.  27,  1917,  Saksmen  Find  New  Outlets  when  Territories 
Are  Reduced  in  Size. 

Oct.  25,  1917,  Philadelphia  Jobbers  and  Retailers  to  Meet 
Chains  tore  Meth  ods . 

Dec.  20,   1917,  Quantity  Discount  under  Fire,  as  Forvi  of 
Price-cutting. 

Dec.  20,  1917,  A  Sales  Chart  which  Rcveah  Dealer  Secrets. 

Jan.  3,  1918,  Bringing  the  Sales  FJnd  through  the  War. 

Jan.  3,  1918,  Selling  Your  Booklets  to  Your  Decders. 

Jan.    10,    1918,    When    War  Shatters  Market,  Manufacturer 
Finds  New  Outlet. 

Jan.  17,  1918,  Stimulating  Sales  by  Daily  Letters  to  Salesmen. 

Jan.  24,  1918,  Even  Monopolies  Must  Have  Good  Will. 

Feb.    7,    1918,    Comparative   Charges   of  Express   and  Mail 
Delivery. 

Feb.  21 .  1918,  How  Liggett  Built  Up  the  United  Drug  Company. 


BIBLKKJRAPHY  615 

Fel).  28,  1918,  How  the  (kner<tl  Electric  Co.  Keeps  Track  of 
Its  Advertising  Space. 

Mar.   28,    1918,   Ca7i    Y'ou  Sell  Goods  to   the   '  Subco7isciou8 
Mind"? 

Apr.  4,  1918,  Dam/erous  to  ''Buck' '  Buying  Habits  in  the  Mail- 
order Business. 

Apr.    11,    1918,    Wide   Range   of    Industries    in    Cooperative 
Advertising. 

May  16,  1918,  Advertising  for  "Return  Loads." 

May  23,  1918,  The  "Why''  of  Odd  Prices  in  Catalogues. 

May  30,  1918,  Future  of  Tying  Contracts  in  Doubt. 

June  27,  1918,  The  Wastefulness  of  an  Inadequate    Appro- 
priation. 

July  18,  1918  and  July  25,  1918,  The  Farm,  a  Great  Reservoir 
of  Branded  Advertising. 

Aug.  15,  1918,  The  Consumer,  the  Advertiser  and  the  Govern- 
ment. 

.\uR-.  29,  1918,  Sept.  5,  1918,  Sept.  12,  1918,  Sept.  19,  1918, 
House  Organs  of  the  United  States  and  Canada. 

Sept.  5,  1918,  Using  Science  to  Meet  Cheap  Unbranded  Com- 
petition. 

Sept.  19,  1918,  Do  Your  Salesmen  Have  a  Voice  in  Shaping 
Your  Sales  Policy  f 

Oct.  10,  1918,  Squeezing  All  the  Business  out  of  Advertising 
Replies. 

Oct.  24,   1918,  Selecting  the  Cover  Design  for  a  Mail-order 
Catalogue. 

Nov.  7,  1918,  Court  Upholds  Colgate  Plan  to  Maintain  Prices. 

Nov.  21,  1918,  Merchandising  and  Advertising  a  Cut-price 
Specialty. 

Nov.  28,  1918,  Size  of  Sales  Territories. 

Dec.  12,  191S,  Investigating  the  Market — Factors  to  be  Con- 
sidered. 

Jan.  2,  1919,  What  about  Factory-Owned  Stores? 

Jan.  30,  1919,  The  Ten-cent  Store  as  a  Means  of  Sampling. 


()1()        PHOBLKMS  IN  SALES  MANAGEMENT 

l'\'l).  (»,  l!H!),  Ihiic  the  Dealer  SclLs"  This  Thing  Cooperation." 

I'Cl).  20,  191!),  Production  Cost  Knowledge  Strongly  Inflvenc- 

ing  Silling  Methods. 

Vvh.  27,   1919,  /;//  Pont  E.vhihit  Turns  into  a  Retail  Outlet. 

Mar.    13,    1919,    Si.rtij-one    Trade   Practices    Condemned    as 
"Ihifair." 

Mar.  27,   1919,  Quesfians  Propmi/Khd  on    Viduation  of  Cood 
Will. 

Apr.    6,    1919,    Shnitld    Your   Salesmen    Also    "Sell"    Your 
Advertising? 

A])r.  10,  1919,  Plussing  a  Sale  to  Clinch  It. 

Apr.  10,  1919,  The  Small  Chain  a  Growing  Market  for  Manu- 
facturers. 

Apr.  24,  1919,  A  Sales  Force  that  Doesn't  Solicit  Orders. 

May  22,  1919,  The  Risks  in  Abandoning  a  Trade-Mark. 

June  5,  1919,  How  to  Obtain  Lists  of  Registered  Trade  Names. 

June  12,  1919,  Teaching  Salesmen   that  the   Goods  are  not 
Sold  until  the  Money  is  Collected. 

June   19,   1919,  Bringing  Together  the  Family  of  Unrelated 
Products. 

June  26,    1919,   Cooyerative   Advertising    that   Develops   the 
Local  Market. 

July  31,  1919,  How  to  Build  up  Trade  Facts  from  the  Sales- 
man's  Report. 

Oct.  2,   1919,  When   It  is   Unsafe  to   be   too   Friendly   with 
Customers. 

Jan.  1,  1920,  Raising  the  Family  of  Products. 

Jan.  1,  1920,  Credits  and  Selling  Instinct. 

Jan.  8,   1920  and  March  18,   1920,  Articles  on  Winchester 
Plan. 

Jan.  8,  1920,  Bervare  the  Super-Salesman  who  Discourages  the 
Rest  of  the  Force! 

Jan.  8,  1920,  One  Man  Did  Two  Men's  Work  with  Help  of 
Advertising . 

Jan.   15,   1920,  Advertising  the  Sales  Force  to  the  Prospect. 


BIBLIOGRAPHY  617 

Jan.  15,  1920,  Is  Collective  Buying  the  Answer  to  the  Growing 
Chain  Store  Menace? 

Jan.  15,  1920,  The  Junior  Salesman  as  a  Means  of  Reducing 
Sales  Expense. 

Jan.  22,  1920,  A  Manufacturer's  Two  Weeks'  Course  for  New 
Salesmen. 

Jan.  29,  1920,  Selling  the  Square  Deal. 

Jan.  29,   1920,   Where  Advertising  Saves  Salesmen's  Work. 

Feb.  5,  1920,  Selliyig  the  Product  as  a  Side-line  to  Fillin  Distri- 
bution Gaps. 

Feb.    12,    1920,    Training   Men   to   Handle   a    Diversity    of 
Products. 

Feb.  12,  1920,  What  the  Final  Consumer  Can  Tell  You  About 
Your  Product. 

Feb.  26,  1920,  Organizing  the  Association  to  Hold  the  Big 
Executive's  Attention. 

March   4,    1920,   How   National  Advertisers    Choose    Their 
Retail  Outlets. 

Mar.  4,  1920,  Traveling  Your  Own  Men  to  Install  Window 
Displays  for  Dealers. 

Mar.    18,    1920,    The    Willys-Overland   Plan  for   Localized 
Advertising. 

Mar.  25,  1920,  Selling  What  the  Factory  is  Best  Equipped  to 
Make. 

Mar.  25,  1920,  Lengthening  a  One-day  Market  into  a  Season. 

Mar.  25,   1920,   What  the  Sales  Promotion  Manager  Has  to 
Do. 

Apr.  1,  1920,  Keeping  the  Sales  Force  Up  to  Par. 

Apr.  8,  1920,  Handling  the  Interrupted  Interview. 

Apr.  8,   1920,  Straight  Salary  for  Salesmen   Makes  Better 
Customers. 

Apr.  15,  1920,  Organizing  Salesmen  to  Manage  Themselves. 

Apr.  22,  1920,  Advertising  to  Bridge  the  off  Season  in  Cut- 
Flower  Sales. 

Apr.  22,  1920,  Advertising  in  New  Fields  When  the  Initial 
Market  Groivs  Smaller. 


(US     pi{()iiij':Ms  IX  sAiJ«:s  management 

Apr.  22,  1020,  Prcvnttiiui  Sm'hd  Pdcliujcs  from  Rcdcli/fKj  the 
(\>nsnin('r's  Tahlc 

Api".  22,  1!>2(),  H7/r/r  MinhiKj  Li.sis  Coi/k   Fioiii. 

Apr.  21),   l*.)2(),  lloir  L/hhi/  is  (liriinj  (in  Old  Advcrdsi nij  f(lr(t 
(I  Xcic  Lease  of  Life. 

May  (),  1920,  Sales  that  Sel  Paee  for  Prochiction. 

May  13,  1920,  Wluti  )'()iir  Ciisloniers  Are  Competitors. 

May   13,  1920,  Anti-Vhuin  AdvertisitKj  Must  Reach  Funda- 
mentals. 

May  20,  1920,  77/  Hkii  if  You  Give  Me  the  K. v eh mve  Agency. 

May  27,  1920,  Adrling  Conveniences  to  the  Package. 

May  27,  1920,  San  Tax  Selects  Trade-Mark  which  Permits 
Constant  Addition  to  Line. 

May  27,  1920,  Peaks  and  Valleys  in  Advertising  and  Sales. 

Juno  3,  1920,  Insuring  Correct  Installations  by  Advertising. 

June    10,    1920,   Making   People   Want  More — the  Basis  of 
Civilization . 

.lunfi  10,   1920,  Having  an  Advertising  Catnpnign  Endorsed 
by  the  Factory. 

June  10,  1920,  What  Advertising  Has  Done  f(u-  the  California 
Fruit  Growers. 

Juno  17,  1920,  What  Has  Been  Done  iyi  Association  Adver- 
tising. 

July   1,    1920,   What  Can  Be  Done  to  Prevent  Cancellation? 

July  8,  1920,  Moving  the  Sales  Department  into  the  Dealer's 
Store. 

July  8,  1920,  Should  Competing  Brands  Be  Sold  by  the  Same 
Organization? 

July  8,  1920,  When  Is  Jobber  Distribution  Advisable? 

July  22,  1920,  Making  the  Rest  of  the  Line  Follow  the  Leader. 

July  29,  1920,  Building  a  Business  on  ChiMren's  Good  Will. 

Aug.   5,   1920,  Finnneiug  u   B)isiness   in   a    Declining   Com- 
modity Market. 


I 


BIBLIOGRAPHY  (il9 

Auk.    12,    1920,  Jobbers  Are  Driving   Mdnufdclnrers  to  Sell 
Direct. 

\n^.  12,  1920,  The  Farmer's  Protest  ogainst  the  High  Cost  of 
Distribution. 

Aug.  19,  1920,  Manufacturer  Strengthens  Relations  by  Adver- 
tising Distributors  to  the  Dealers. 

Aug.  19,  1920,  Helping  the  Dealer  }yho  Does  Not  Sell  Your 
Goods. 

Sept.  2,  1920,  Whij  and  How  the  Wholesale  Grocers  Should 
Advertise. 

Sept.    9,    1920,    Advertisers    Must    Learn    How    Consumer 
Acceptance  Operates. 

Sept.  16,  1920,  Selling  Small  Dealer  First  for  Wider  Distri- 
bution. 

Sept.  16,  1920,  The  Eastman  School  of  Professional  Photog- 
raphy. 

Sept.  30,  1920,  .4  Short  Compact  Line  Means  Quick,  Paying 

Turnover. 

Oct.  7,  1920,  Hiring  the  Salesman  Who  Makes  Good. 

Oct.  7,  1920,  Nursery  Practices  in  Dealing  with  Cancellation 
Evil. 

Oct.  28,  1920,  Hoiv  Quick  Wit  Won  Two  Continents  by  Bold 
Strokes  of  Advertising  and  Merchandising. 

Nov.  11,  1920,  Some  Valuations  that  Have  Been  Placed  on 
Well-Known  Trade-Marks. 

Nov.  11,  1920,  Community  Advertising  Campaigns  in  Print- 
ers' Lnk. 

Nov.   11,  1920,  Why  Have  So  Many  Products  in  the  Line? 

Nov.  18,  1920,  Full-line  Trend  on  Farm  Implement  Marketing 
and  Advertising. 

Nov.  18,  1920,  Advertising  Built  on  Dealer  Tie-ups. 

Dec.  2,  1920,  A  Seasonal  Market  Taken  During  the  War  is 
Made  Continuous. 

Doc.  2,   1920,   Work  with  and  for  Dealers  a    Vital  Part  of 
Kuppenheimer  Campaign . 


620        PKOHLEMS  IN  SALES  MANAGEMENT 

Dec.  0,  1020,  FAcrcn   Wdfis  to  Ihtihl  tin-  Advertising  Appro- 
pridlion . 

Dec.   l(i.  1!)2(),  .S7//^///  )'(>ur  (' Nil  of  Sah. 

!)(>('.  2:5,  1920,  Hoir  to  licducc  Dealer  Mortality. 

Doc.  2'^,  1920,  The  SdlesuKDi  Who  Gives  Away  Secrets. 

D(M\  ?,{),  H)2(),77/r  Cost  of  (iettiNfi  out  n  Catalogue. 

Jan.  6,  1021,  Are  Wotnen  Best  Sellers  of  Products  for  House- 
keepers/ 

■Ian.  i;>,  1021,  (iroiip  Advertisi/uj  lldps  Cash  in  on  Good-will. 

Jan.    11^,   1021,  How  to  Rouse  the  Indifferent  Retail  Clerk. 

Jan.  20,  1021,  Selling  Profits  to  Overcome  Dealer  Resistance. 

Jan.    20,    1921,    How    Educational   Advertising    Sells    Foot 
Appliances. 

Jan.  20,  1921,  British  Service  Agencies  Tell  How  They  Help 
Manufacturers. 

Jan.    27,    1021,    Cancellations   Cause   Manufacturer   to   Sell 
Goods  Direct. 

Jan.  27,  1921,  National  Lamp  Works  Help  the  Dealer  to  Help 
Himself. 

Jan.  27,  1021,  Is  Your  Catalogue  Problem  Discussed  Here? 

Feb.  3,  1021  and  Feb.  10,  1021,  Should  Manufacturers  Run 
Their  Own  Retail  Stores? 

Feb.  3,    1021,   Big  Sales  from  a  Small  Advertising  Appro- 
priation. 

Feb.  3,  1921 ,  Credit  Men's  Recommendations  on  How  to  Reduce 
Cancellations. 

Feb.  10,  1921,  When  Business  Gets  in  a  Rut. 

Feb.  10,  1921,  Small-town  People  Are  No  Longer ''Different.'' 

Feb.  10,  1921,  The  Salesman  on  Emergency  Duty. 

Feb.  10,  1921,  .4  Selected  List  of  House  Magazines. 

Feb.  17,  1921,  Winning  Over  the  Territory  that  Balks. 

Feb.  17,  1921,  How  to  Get  a  List  of  Dealers  When  You  Sell 
Onlji  Through  Jobbers. 


BIBLIOGLAPHY  621 

Feb.    17,    1921,  /.s   There  Such   a    Thituj  as  an  ''Optimum" 
Sales  Point? 

Feb.  24,  1921,  How  to  Combat  "Own  Goads"  Bonus  in  Chain 
Stores. 

Feb.    24,    1921,    Importance    of   Demonstrating    New    Food 
Products. 

Mar.  3,  1921,  How,  Today,  Should  Salesmen  Talk  Advertis- 
ing? 

Mar.  3,  1921,  A  Scientific  Scale  of  Discounts  to  Jobbers. 

Mar.  10,  1921,  Workers  Cease  to  be  Buyers  Whe?i  Production 
Fails. 

Mar.    10,    1921,    Revised   Sales    Unit   Stiffens   Backbone   of 
Industry. 

Mar.     17,     1921,    How    Sherwin-Williants    Reduces    Dealer 
Mortality. 

Mar.  17,  1921,  This  Is  the  Way  Some  National  Advertisers 
Figh t  Substitit tion . 

Mar.  24,  1921,  How  Many  Customers  Make  a  Market? 

Mar.  24,  1921,  Increasing  Sales  by  Advertising  the  Industry. 

Mar.  24,  1921,  Financing  the  Dealer's  Stock  in  Trade. 

Mar.  31,  1921,  How  Victor  Educates  the  Retailer  to  Sell  Red 

Seal  Records. 

Mar.  31,  1921,  Helping  Salesmen  Find  Themselves. 

Apr.  7,  1921,  How  Shall  I  Pay  My  Salesmen  Under  Present 

Conditions? 

Apr.  7,  1921,  Factory  Workers  Who  Are  Becoming  Successful 
Salesmen. 

Apr.  7,  1921,  Tests  to  Find  the  Advertisable  Argument. 

Apr.  7,  1921,  Cataloguing  the  Line  When  Styles  and  Prices 
Are  Changing. 

Apr.  7,  1921,  How  to  Get  Your  Merchandise  Demonstrated  at 
Retail. 

Apr.  14,  1921.  How  Advertising  Aids  the  Credit  Seeker. 

Apr.  21,  1921,  A  Newcomer  Revises  Sales  Units  of  Established 
Manufacturers. 


022        TKoHLEMS  IX  SAL1':S  MAXAGEMENT 

Api'.  21,  l'.(21.  W'hrrc  Do  (iixxl  SaUsnnh  Coriie  From' 

Api-.  2S,    li>2J,  llotr  (hie  H/fi  Advertiser  H (indies  Its  Brdnch 
(h-(j(inizatii)u . 

Apr.  2S,   1021,  Mdinifdctiirers  Come  la  the  Jolilier's  Defense. 

May,  o,   1921,    Il'/V/  the  CataUxjue   Lend  Sellimj  Out  of  the 
Wilcleniess/ 

May  '),  1921,  (ktting  a  Product  Past  lis  "Suspiciun"  Stage. 

May  12,  1921 ,  Salesme7i  and  Advertising  Work  Best  as  a  Team. 

May  2(),  1921,  .1/;  Cnusual  /'Ian  for  I)istril)uting  Advertising 

Througli  Jol)bers. 

May  2<),  1921 ,  Teaching  the  Dealer  the  Meaning  of  Marketing. 

Jimo  2,  192J,  Keep  Your  Advertising  Appropriation  Flexible. 

.hiiic  2,  1921,  Salesmen's  ('ours;e  Adds  to  F<rrce  of  Increased 
Advertising. 

June  9,  1921,  To  Trdde-Morlc  a  I'rodiirt  (hot  Has  Survived 
Years  of  A  noni/niity. 

.hiiic  9,  1921,  Iloic  AUis-Chalniers  Presents  Its  New  Advertis- 
ing Campaign  to  Dealers. 

June  9,  1921,  Hoiv  Can  Consumer  Advertising  Best  be  Mer- 
chandised? 

Juno  U),  1921,  How  Advertising  Affects  Standardization. 

June  IG,  1921,  Changing  the  Product  to  Fit  the  Xeed. 

June   23,    1921,   Increasing  Sales   by   Exposing  the   Selling 
Organization  to  More  Business. 

June;   23,    1921,  Dealer  Advertising  to  Bridge  the   Summer 
Valley. 

June  23,  1921,  Builds  Future  Business  by  Finding  and  Train- 
ing Retailers. 

June   23,    1921,   How    Will  Marketing  Organizations  Affect 
Methods  of  Distribution/ 

June  30,  1921,  Good  Old-Fashioned  Brand  Xame  Advertising, 
the  Specific  for  Substitution. 

July  7,  1921,  How  a  New  Use  Developed  a  New  Outlet. 

Jul>'  7,  1921,  Seasonability — .4  Fact  or  a  Supersfitionf 


BIBLIOGRAPHY  623 

.Inly  21,  1921,   117///  So  Main/  Retnilcrs  Sinilloir  the  Private 
Brand  Argument. 

.July   21,    1921,   *,Srtfe.s   Education    Methods   of  the  American 
Radiator  Company. 

.July  28,  1921 ,  Bases  Big  Drive  on  New  Uses  Rather  Than  Low 
Prices. 

Aug.  4,  1921,  Can  Sales  Be  Increased  by    Abolishing   Exclu- 
sive Agencies? 

Aug.  4,  1921,  When  Dealers  Want  the  Credit  for  Making  Your 
Goods! 

Aug.   11,  1921,  Smoothing  the  Salesman's  Way  in  Difficult 
Market. 

Aug.  11,  1921,  Making  the  Salesman  Credit  Manager. 

Aug.  11,  1921,  Statistics — Using  Them  Effectively  in  Adver- 
tising. 

Aug.  18,  1921 ,  How  a  Raw  Material  Can  be  Advertised. 

Aug.  18,  1921,  How  We  Turn  Old  Customers  into  Salesmen. 

Aug.  18,  1921,  Overdoing  the  Eollow-np. 

Aug.  18,  1921,  Another  Plan  to  Cet  Jobfiers  to    Use  Manu- 
facturer's Literature. 

Printers'  Ink  Monthly 

.Jan.  1920,  p.  46,  Advertising  Personally  Handed  to  the  Dealer. 

Feb.  1920,  p.  45,  Making  Every  Catalogue  Item  Pay  Its  Way. 

Mar.  1920,  p.  28,  Selling  $500,000  Worth  of  Dealer  Helps  a 
Year. 

Apr.  1920,  p.  8.3,  Questionnaire  Helps  Mayer  Brothers   Aid 
Retailers. 

Apr.  1920,  p.  49,  A  President  Sells  Dealer  Helps  to  Salesmen. 

May  1920,  p.  53,  A  Tested  Plan  for  Producing  a  Small  Cata- 
logue. 

June    1920,    p.    28,   Detailed    Methods    that    Build    the    Big 
Catalogue. 

Aug.  1920,  p.  75,  A  Training  School  for  User's  Employee. 

Sept.  1920,  p.  13,  How  Armour  Trains  Cubs  to  be  Star  Sales- 
men. 


024        PKDBLlvMS  IX  SALIOS  MANAGEMENT 

Oct.  1020,  p.   I."),  n>nr  Armour  Helps  the  Retailer  Help  Ilim- 
.elf. 

Nov.    1020,    p.    r»2.    This    Mamifdcturer   Educates  Retailers' 
Clerks. 

Dec.    1020,  p.    10,   Then  Had  to  Create  17  New  Markets  for 
Their  Prod  net. 

Dec.    1020,   p.   25,  Containers    that    Suggest    Luxury    of   the 
Rroduct. 

Dec.  1020,  p.  T)'),  Getting  the  Consumer  to  Select  Your  Package. 

Jan,  1021,  p.  ()7,  Selling  Jobbers'  Salesmen  by  Getting  Them 
to  Taste  Product. 

Fob.  1021,  p.  17,  Fitting  the  Sales7nan  in  the  Territory. 

Feb.  1021,  p.  10,  He  Puts  His  Personality  into  His  Catalogue. 

Mar.  1021,  p.  51,  Details  that  Make  Better  Advertising  Books. 

Mar.  1021,  p.  25,  Do  You  Analyze  Markets  for  Your  Sales- 
men? 

Apr.    1021,    p.    11,    Intensive    Selling    that    Backs    Up   the 
Advertising  Campaign. 

Apr,  1021,  p.  13,  When  the  Credit  Man  Censors  the  Mailing 
List. 

May  1021,  p.  13,  Financing  a  B^isiness  through  Advertising. 

May,   1021,  p.   17,  Sweet-Orr  Consmners'  Contest  Increases 
Business  Fifty-two  Per  Cent. 

May  1021,  p.  27,  Delco  Directs  Sales  Organization  of  4)^00 
with  Map. 

June  1021,  p.  13,  Trade-marking  "Difficult"  Merchandise. 

.Iiiiie  1021,  p.  15,  Contests  that  Personalize  One  Sales  Force 

June  1021,  p.  10,  When  It  Pays  to  Persuade  Your  Competitor 
to  Advertise. 

June  1021,  p.  21,  What  Are  Your  Salesmen  Doing  Between 
Trains.'' 

June  1021,  p.  35,  Getting  the  Dealer  to  Understand  Your  Line. 

July  1021,  p.  23,  Breaking  the  Buyer's  Strike  by  Improving 
the  Product. 

July  1021,  p.  31,  Finding  out  Facts  ahnut  Business. 


BIBLIOGRAPHY  625 

July  1921,  p.  37,  Taking  the  Salesynan  into  Partnership. 

Aug.  1921,  p.  13,  It  Is  Easier  to  Make  Advertising  Progress 
During  Periods  of  Business  Depression. 

Aug.  1921,  p.  21,  Seagoing  Salesmen. 

Aug.  1921,  p.  37,  Letters  from  Farmers  Make  Effective  Sales 

Arguments. 

Aug.  1921 ,  p,  39,  Getting  the  Consamer  to  Expand  His  Buying 
Units. 

PERIODICALS 

Sales  Management. 

Oct.  1919,  p.  11,  A   Catalogue  Follow-up  that  Pulled  25% 
Returns. 

Nov.  1919,  p.  43,  Three  Letters  that  Closed  33%  Inquiries. 

Nov.  1919,  p.  52,  r/ie  Neck  of  the  Sales  Bottle. 

Dec.  1919,  p.  83,  Why  We  Set  Sales  Tasks  for  Our  Men. 

Dec.  1919,  p.  87,  The  Making  of  a  Branch  Salesman. 

Jan.  1920,  p.  121,  A  Bonus  Plan  that  Increased  Sales  142%. 

Jan.  1920,  p.  130,  //  /  Were  a  District  Sales  Manager. 

Feb.  1920,  p.  157,  How  We  Made  Over  Our  Saks  Force. 

Feb.  1920,  p.  166,  Qualifications  of  Sales  Manager  Are  Many. 

Mar.  1920,  p.  201,  How  We  Abolished  Drawing  Accounts. 

Mar.  1920,  p.  205,  Overlooked  Letter  Opportunities. 

Apr.  1920,  p.  251.  How  We  Built  Our  Sales  Convention. 

Apr.  1920,  p,  266,  Building  a  ^27,000,000  Business  in  Seven 
Years. 

Apr.  1920,  p.  271,  //ou?  Sales  Managers  Use  the  Bureau  of 

Sta7idards. 

May  1920,  p.  299,  Are  Salesmen  Underpaid.^ 

May  1920.  p.  303.  The  Hood  Plan  of  Working  a  Sales  Ter- 
ritory. 

May  1920,  p.  336,  TiroUn  (Jucslions  We  Asked  Our  Salesmen. 

Juno  1920,  p.  404,  The  Hubbub  Over  the  Postage  Rate  Catalogs. 


(J2()       PROBLEMS  IN  SALKS  MANAGEMENT 

June  1920,  p.  iis;^  II, nr  I  Make  M ij  Letters  Pnll. 
.Inly  1020.  p.  n<),  .S'/.r  Men  Who  Might  Have  Been. 
.Inly  11)20,  p.  I2;i,  The  Big  Thing  in  Picking  Men. 
Aii^.  1!)20,  p.  1()7,  (Jnr  Experience  with  Prize  Contests. 
Au^.  1!)20,  p.  \~'.\,  Iloir  We  Handle  Salesmen's  Expenses. 
Aiiii.  1!)2(),  p.  481,  More  "Pep'\for  Jobbers'  Salesmen. 
S(>pt.  1920,  [).  527,  The  Salesniiin  irith  a  Set  Speech. 

Sept.    1920.    p.    543,    Obscure    Post    Office    Facilities    Sales 

Managers  Can  Use. 

Oct.  1920,  p.  7,  What  I  Think  a  Salesinan  Should  Be. 

Oct.  1920,  p.  5o,  Five  Points  We  Use  in  Classifying  Sales- 
men. 

Nov.  1920,  p.  73,  Marshall  Field's  Dealer  Help  Policy. 

Nov.  1920,  p.  104,  How  We  Cut  Down  Our  Mortality  Rate. 

Nov.  1920,  p.  Ill,  Why  a  Dealer  Should  Stock  Before  Demand. 

Dec.  1920,  p.  123,  Earnings— S8, 000  a  Year. 

Dec.  1920,  p.  128,  What  Should  Determine  the  Sales  Mana- 
ger's Salary? 

Dec.  1920,  p.  147,  Why  I  Do  Not  Believe  in  Sales  Manage- 
ment by  Committee. 

Jan.  192*1,  p.  177,  Adventures  in  Recruiting  Salesmen. 

Jan.  1921,  p.  187,  Made-to-Order  Salesmen. 

Feb.  1921,  p.  229,  How  Goodyear  Picks  Salesmen. 

Feb.  1921,  p.  247,  Why  I  Believe  in  Application  Blanks. 

Mar.  1921 ,  p.  2S3,  When  the  Sdle  h'lins  Into  Big  Figures. 

Mar.  1921,  p.  303,  How  Do  You  Pick  Your  Dealers? 

Apr.  1921,  p.  329,  They  Didn't  Know  It  Couldn't  Be  Done. 

Apr.  1921,  p.  333,  Sales  Manager.s  I  Have  "Fired." 

Apr.  1921,  p.  343,  The  Data  That  Comes  to  My  Desk. 

May  1921,  p.  381,  Is  a  Sales  Manager  Too  Okl  at  Forty? 

May  1921,  p.  395,  How  We  Planned  Our  Sales  Contest. 


BIBLIOGRAPHY  627 

May  1921,  p.  412,  Fixing  Salenmen's  Salaries  Scientifically. 

June  1921,  p.  431,  What  Will  We  Do  at  Our  Convention  This 
Summer? 

June  1921,  p.  434,  Using  Your  Salesmen  to  Get  New  Recruits. 

June  1921,  p.  462,  Selling  Salesmen  on  the-  Importance   of 
Credits. 

July  1921,  p.  478,  How  I  Put  Fight  into  Salesmen. 

July  1921,  p.  481,  Set  Speeches  vs.  Chance  Guesses. 

Aug.  1921,  p.  513,  To  Whom  Should  the  Credit  Gof 

Aug.  1921,  p.  515,  Do  Sales  Contests  Really  Pay? 

Aug.  1921,  p.  519,  The  Salesman  I  Picked — and  Why. 


Sales  Manager. 

June  1919,  p.  5,  The  Promotion  Department  a  Sales  Making 
Factor. 

June  1919,  p.  7,  Things  thai  Coimt  for   Success  in  Selling. 

June  1919,  p.  9,  The  Relationship  of  the  General  Sales  Force  to 
Export  Trade. 

Aug.  1919,  p.  19,  Facts  Versus  Guess  Work. 

Aug.  1919,  p.  25,  Training  the  Sales  Force. 

Sept.  1919,  p.  35,  Sales  Policies — Correct  and  Incorrect. 

Sept.  1919,  p.  45,  Sales  Control. 

Oct.  1919,  p.  59,  The  Selection  and  Training  of  Salesmen. 

Oct.  1919,  p.  61,  The  Statistics  of  Sales  Management. 

Oct.  1919,  p.  63,  What  Should  Go  Into  The  Salesman's  House 
Orga n . 

Nov.  1919,  p.  83,  Prize  Contests. 

Nov.   1919,  p.  87,   Uncle  Sam's  Finger  in  the  Selling  Pie. 

Nov.  1919,  p.  89,  The  Modern  Use  of  an  Old.  Slogan. 

Dec.  1919,  p.  107,  Choosing  the  Sales  Force. 

Dec.  1919,  p.  115,  Backing  up  the  Salesman. 

Jan.  1920,  p.  133,  Helping  the  Sales7nan  Get  the  Price. 


628        I'KOliLKMS  h\  SALES  MANAGEMENT 

Jan.  1020,  p.  \'.\7 .  An  ('nitjue  Prize  Contest. 

Feb.   1920,  p.    I")!),  Kiilisling  the  Sdlesnidn  as  a  (iood   Will 
Vigilante. 

Fcl).  n>2(),  p.  1(11,  Sunt  Literature  for  Salesmen. 

M;ir.  ni2(),  p.  170,  Hiiilding  a  Sueces.sfiil  Sales  Convention. 

Mar.  I!)2(),  p.  189,  Selling  Yourself  to  the  Sales  Manager. 

Api'.    1920,   p.  211,  Iloir  the  Sales  Manager  Can  Best   Use 
I)  i reel  Advertising. 

\\)v.  l*,)2l),  p.  2i;i,  Harking  up  the  Salesman  from  the  Inside. 

Apr.  1920,  |).  223,  Di.seases  of  the  Salesman. 

May  1920,  p.  245,  Measuring  the  Invisible  in  Sales  Work. 

May  1920,  p.  248,  Law  for  the  Business  Man.  No.  1 ;    What 
Constitutes  Delivery. 

June  1920,  p.  275,  Profit  Sharing  Applied  to  the  Sales  Organ- 
ization. 

June?  1920,  p.  277,  Stimulating  Salesmen. 

June   1920,  p.  281,  Simplifying  Salesmen's  Correspondence 
and  Records. 

July  1920,  p.  3,  Hinging  the  Sales  to  Service. 

July  1920,  p.  5,  A  Modern  Form  of  Compensation. 

July  1920,  p.  6,  Law  for  the  Business  Man.     No.  2:    The 
Transfer  of  Good  Will. 

July  1920,  p.  13,  The  House  Organ  as  a  Sales  Tool.     Part  I. 

July  1920,  p.  20,  The  Relation  of  Collection  Letters  to  Sales. 

Aus-  1920,  p.  38,  Iauv  for  the  Business  Man.  No.  4;    Confi- 
dential Reports. 

Aug.  1920,  p.  45,  The  House  Organ  as  a  Sales  Tool.     Part  II. 

Sept.  1920,  p.  67,  Hanunering  Home  the  Sales  Policy. 

Sept.  1920,  p.  ()9,  Law  for  the  Business  Man.     No.  5:    When 
You  Hire  a  Salesman. 

Oct.  1920,  ]).  99,  Should  There  Be  Separate  Departments  and 
Sales  Forces  for  Different  Products  Made  by  One  Concern? 

Oct.  1920,  p.  101,  Coordinating  Advertising  and  Sales  Efforts. 


BIBLIOGRAPHY  G29 

Oct.  1920.  p.  10(),  Business  Lmr  for  the  Sales  Executive. 

Nov.  1920,  p.  135,  Scllimj  Direct  ]'ersus  Jobber  Distributinn. 

Nov.   1920,  p.    142,   When    )'(>u  del  a  dood  Distributor,  Keep 
Him. 

Dec.  1920,  p.   165,  MaLing  Salesme/i  Business  Men  Makes 
for  Bigger  Business. 

Dec.  1920,  p.  169,  Lair  for  the  Business  Man.     No.  6:    Trade 

Names. 

Dec.  1920,  p.  170,  The  Sales  Bronuition  De/xninH  td. 

Dec.  1920,  p.   178,  (le1t>ng  the  Most  Out  of  Your  Interviews. 

Jan.    1921,  p.   197,  (iraphics  of  an   Advertising  and  Selling 
Campaign. 

.Jan.  1921,  p.  202,  Law  for  the  Business  Man.     Nn.  7:   Trade 
Acceptances. 

Jan.  1921,  p.  207,  Selling  the  Salesman  to  the  Prospect. 

Jan.  1921,  p.  209,  How  the  Portfolio  Aids  Salesmen. 

Jan.    1921,   p.   210,  Saving  Steps  Versus  Saving  Tliought  in 
Districting  Salesmen . 

Jan.   1921,  p.  21-3,  Maintaining  a  Steady  Demand  Through 
Dealer  Morale. 

Mar.  1921,  p.  283,  Sell  Ideas  and  Service  First. 

Api'.  1921,  p.  317,  Research  as  a  Business  Weather  Vane. 

Apr.  1921,  p.  321,  Scientific  Sales  Letters. 

May  1921,  p.  367,  Training  the  Sah^man. 

May  1921,  p.  370,  Iloir  the  Portfolio  Atds  the  Dealer. 

Mav  1921,  p.  371,  Perfect  Installation  More  Iniportitnt  than 
'  the  Sale. 

June  1921,  p.  415,  Separate  Sales  Forces  for  Different  Special- 
ties. 

June  1921,  p.  417,  Selling  the  Idea  and  Not  the  Product. 

July  1921,  p.  7,  Is  the  "Star"  Salesman  a  Heal  Asset  to  the 
Sales  Force? 

July  1921,  p.  10,  Your  Salesman  in  the  Office. 


030        PROBLEMS  IN  SALi;s  MANAGEMENT 

Aii^i.  I'.tIS,  p.  1S:».  MitLiiKj  tlu   Mini  l)i>  tl,<   W'orL-  of  Sdhstiicn. 

Oct.  191S,  p.  r)|(),  Unir  1  Snr  (p  S(il('S7ftcn. 

Mai'.   1!)1S,  p.  'A\U\,  '!'(■•<(  of  (I  (looil  Soh'suKin . 

Api'.   19  IS,  p.  (142,  Trdiiiiitij  (I  Mail  to  Sell. 

May    IIMS,   p.    7.'iS,   Siii'itKj   Momi/  on   S<il(  .smc/i'.s  Saniplefi. 

May   191S.  p.  SOS.  llmr   H'r  I'hnincil  o  DijUrmt  Soles  ('am- 
ixiifin. 

May   lOlS.  p.  1107,  W'h/rh  TrrritorKs  I'oii.' 

,]\\\\    1!)19,  p.    \')(),  l)i)(s    Your  Solisiniin  l\<  porl  os  FuUij  as 
This? 

Oct.  1919,  p.  G.")!,  Moiling  Lists  that  Sell  More  (iood^. 

\)vv.  1919,  p.  lOSl,  CullnKj  Territories  to  Sell  More. 

Jan.  n)19,  )).  100,  Hoir  I  Piek  and  Train  Salesmen. 

Mar.   1919,  p.  401,  Making  Sales  that  Help  to  Moke  More 
Sales. 

Apr.  1919,  p.  636,  Soring  Work  for  Salesmen. 

Nov.  1920,  p.  828,  Hiring  Letters  In.^fead  of  Salesmen. 

Aug.  1920,  p.  227,  Killing  Sales  Superstitions. 

July  1920,  p.  48,  Are  Contests  Worth  While.' 

Dec.  1920,  p.  1045,  Better  Salest7ien — and  Fewer  of  Them. 

July  1920,  p.  19,  Hoic  I  Get  My  Best  Salesmen. 

Nov.    1920,   p.   861,   Our  Salesmen   Own    Their   Territories. 

Oct.    1920,  p.  616,  Straight  Commission.  Salary,  Bonus — Is 
There  a  Better  Way  to  Pay.' 

Dvv.  1920,  p.  1066,  Silent  Drumnier.s. 

Mar.  1020.  p.   191,  My  Method  of  Setting  Quotas. 

Apr.  1920,  p.  719,  Taking  the  Buyer's  Side  in  Selling. 

Jan.  1920,  p.  61,  A  Bonus  Plan  that  Cuts  Costs. 

.\pr.  1921 .  p.  628,  .4  Xovel  Conte.st. 

Mar.  1921 ,  p.  370,  How  362  Concerns  are  Succes.'<fully  Meeting 
the  Buyers'  Market. 


BIBLIOGRAPHY  631 

June    1921,    p.    808,    MeetitKj   the    DchkiiuI  for    Kconomical 
Selling. 

June  1921,  p.  785,  What  4')  Years  in  Hiisine.'<s  Have  Taught 
Me  About  Selling. 

Feb.  1921,  p.  191,  Do  Your  Sale.s  Cost  You  Too  Muchf 

Mar.  1921,  p.  892,  How  We  Help  Our  Dealers  Sell. 

May  1921,  p.  673,  Connection  Between  Sales  and  Advertising. 

Mar.  1921,  p.  355,  Hoir  We  Keep  Our  Sales  Volume  Growing. 

June  1921,  p.  799,  How  I  Develop  Salesmen  into  Order  Getters. 

Apr.  1921,  p.  533,  Logical  Ways  to  Reduce  High  Selling  Costs. 

May  1921,  p.  671,  Why  Our  Sales  Picked  Up  Last  Fall. 


INDEX 


Acceptances,  308*. 

Adding  Machines,  see  Office- Ap- 
pliance Trade. 

Adjustments,  see  Cancelations. 

Administrative  Control,  304,  325, 
326,  327. 

Advertising,  Appropriation,  181; 
Campaign,  111;  C^ontrol,  63; 
Cooperation  with  SeHing,  50, 
188,  242;  Organization  for,  51, 
52,  53;   Market  Reached  by,  83. 

Agricultural  Machinery  Trade — 
82,  110,  124,  135,  146,  161, 
169,  314. 

Analysis,  see  Market  Analysis. 

Application  Blanks,  38. 

Art-Novelty  Trade,  11,  74,  196, 
270. 

Automobile  and  Accessorv  Trade, 
17,  19,  22,  24,  49,  51  i  57,  66, 
68,  72,  80,  100,  108,  119,  124, 

130,  135,  149, 154, 164, 173, 185, 
201,  211,  214,  219,  221,  230, 
270,  289,  290,  313,  315,  325,  330. 

B 

Banking,  278. 

Beverage   Trade,    151,    169,    199. 

Bonuses,  262,  263,  264. 

Book  Trade,  162. 

Branches,  as  Warehouses,  46,  322; 
Location,  3,  4,  45;  Organiza- 
tion, 44,  47,  48,  49. 

Brand     Policv,     Manufacturers' 

131,  139,  212;  Private,  132, 
Using  Two  Brands  for  Same 
Line  of  Goods,  134. 

Broken-Package  Room,  239. 
Budget  System,  304. 

C 

Campaigns,  Advertising,  111. 

Cancelations,  Claims,  Adjust- 
ments, Returned  Goods,  183, 
184,    185,    186,   244,   245,    246. 

Cereals,  see  Food  Trade. 

Chain  Stores,  Distribution 
through,  147,  148;  Establish- 
ment by  Wholesalers,  235. 


Claims,  see  Cancelations. 

Clocks  and  Watches,  31,  89,  105, 
117,  303. 

Commissions,  259,  260,  261,  269, 
270. 

Committee  Organization,   11,   12. 

Competition,  Advertising  vs.,  196; 
Meeting  of,  199,  234,  235,  237, 
238;  Relations  with  Competi- 
tors, 247. 

Confectionery  Trade,  25,  110,  118, 
144,  160,  301,  326. 

Consignment,  218. 

Containers,  77. 

Contests,  292. 

Contracts,  in  .Specific  Lines,  226, 
227;  with  Consumers,  219;  with 
Exclusive  Dealers,  220,  221,  222; 
with  Salesmen,  271,  272;  with 
Whole.salers,  223,  224,  225. 

Conventions,  291. 

(Cooperation,  between  Advertising 
and  Selling,  50,  188,  242; 
between  Credits  and  Sales,  279; 
between  Sales  and  Production, 
59,  112,  248;  between  Traffic 
and  Sales,  60;  with  Retailers, 
206, 207, 208, 211,  213,  214,  215; 
with  Wholesalers  or  Jobbers, 
209,  215,  217. 

Cooperative  Associations,  91,  115, 
133,  137,  150,  179,  193,  209. 

(Jordage  Trade,  168. 

Costs,  of  Doing  Business,  153;  of 
Sales,  294,  295,  296. 

Credits,  Cooperation  with  Sales 
Department,  279;  Management, 
310,  311,  312;  Organization  for, 
58. 

D 

Dealer  Help.s,  Cooperation  with 
Retailers,  206,  207,  208,  211, 
213,  214,  215;  with  Wholesalers 
or  Jobbers,  209,  215,  217. 

Dealers,  Selection  of,  8S,  200. 
See  also  I)i.'<trih)ition. 

Deferred  Payments,  311,  312,  313. 

Delivery,  Cooperation  between 
Sales  and  Traffic  Departments, 


*Number.s  refer  to  problems,  not  to  pages. 

633 


()Hl 


PHohl.KMS  IX  SALES  MANAGEMENT 


()0;  HaiidliiiK  Oiiicrs,  .'517,  iilS, 
:n\},    32;i;    Packing    and    Sliip- 

piuK.  ii;i,  1S2,  :nv),  ;i2();  su>v- 

inn  and  WarclioiisitiK,  -VJl,  ;{22. 
Dcriiaii.l.  ( 'rcatiiiii  of,  l<.t;{;  Marki-t 

Analvsi.sof,  70,  7S;   Staliilitv  of, 

79,  80. 
Departmentalization,    l.'>,    II,    1"), 

16,  26,  329. 
Direct  Sale.s.   136,   137,   13<),   140. 
Discontinued     Lines    or    Special 

Orders,  l'y5,  15(). 
Discounts,  (Jash.  1.57,  l.")S;  Policy, 

163,    164;   Quant itv,    16."),    166, 

229;    Trade  Kil,  162,  229,  230; 

Unauthorized,  170,  173. 
Distribution,    Chain    Stores    and 

Mail-order    Houses,    147,    14S. 

149;   Channels,   Choice  of,  S7, 

S8.  89,  90,  91,  93,  135,  136,  lo6, 

192,  200,  218;  Control  of,  141; 

Manufacturers'    Retail    Stores, 

127,  143;   through   Wholesalers 

in    Competition    with     Private 

Brands,  199. 
Drawing  Accounts,  286.     See  also 

Salesmen,  Competisation  of. 
Drop  Shipments,  178. 
Drug  and  Chemical  Trade,   168, 

174,   247,   262.   275,   287,   328. 
Dry-Goods  Trade,  23,   144,   175, 

176,  225,  267,  268,  276,  297,  .309. 

E 

Electrical-Equipment  Trade,  39, 
48,  110,  111,  327. 

Exclusive  Agencies,  144,  145. 

Expenses,  See  Salesmen,  Com-pen- 
sation  of.     See     Sales  Expense. 

Export  Sales,  Relation  to  Domes- 
tic, 54,  55. 


Financial  Limitations  as  Affecting 
Sales,  17,  18,  305,  306. 

Financial  Policy,  Control  of  Distri- 
bution, 141;  Prepaying  Freight 
to  Branch  Houses,  307;  Special 
Methods,  313,  314.  315;  Refla- 
tion to  Sales,  305,  306;  Terms  of 
Sale,  309. 

Flour,  see  Food  Trade. 

Follow-ups,  242. 

Food  Trade,  77,  1.32,  1.38,  1.50, 
167,  169, 186, 202, 215, 235, 239, 
244,  261, 265, 287, 295, 300, 312, 
318;  Bakerv  Products,  21,  110, 
147,  165,  i98,  280,  281,  321; 
Breakfast  Foods,  16,  35,  178, 
229,  296;  Canned  Goods,  193, 


223,  311;  Cooking  Comjjound, 

1.53;      Flour,      18,      1.35,      192; 

Fruit,   91,   115,    131,    1.33,    137, 

209/224;  Sugar,  183;  Syrup,  90. 

See    also    Confectioner!/    Trade; 

Packinff  Trade;   lierrrac/e  Trade. 
l''ruit,  .see  Food  Tnnle. 
Full  Line  vs.  Specialties,  124. 
Functional    Organization,    9,    10. 

See  also  Sales  Organization. 

G 

(iannent  Trade,  2,  10,  27,  32,  49, 
86,  97,  109,  120,  122,  128,  1.35, 
142,  144,  188,  200,  222,  2.34, 
237,  241,  260,  271.  285,  292. 
Good  Will,  Development  and 
Retention,  202,  203,  204,  205, 
210,  236. 

Governmental  Aid  and  Regula- 
tion, 251. 

Grocers,  See  Wholesalers. 

(iuarantee  Policv,  Against  Price 
Decline,  167,  168,  169,  Quality, 
116,  118;  Service,  117,  119. 

H 

Hardware  Trade,  166,  168,  246, 
288. 

Heating-  and  Illuminating- 
Apparatus  Trade,  106,  110,  135, 
144,  218. 

Hospital-Supply  Trade,  56,   320. 

Houshold  Furnishings  and  Appli- 
ances, 65,  115,  1.35,  145,  197, 
207,  266. 

House  Organs,  as  Developers  of 
Good  Will,  203. 

I 

Instalment  Sales,  311,  312,  313. 

Insurance,  67. 

Interviews,     37,     43.     See     also 

Salesmen,  Selection  of. 
Inventories,  300. 
Iron  and  Steel  Tr.ade,  227. 


.lewelry  Trade,  125. 

.Job  iVnalysis,  36. 

.lobbers.  Cooperation  with,  209, 
215,  217;  Cost  of  Doing  Busi- 
ness, 153;  Elimination,  139, 140; 
Methods,  168,  Salesmen,  276. 

.Junior  Salesmen,  35. 


Laundrv  Equipment,  238. 
Leather  Trade,  158,  252. 


INDEX 


635 


Line-and-Staff  Organization,  7,  8. 

See  also  Sales  Organization. 
Location,    Branches,    3,    4,    45; 

Sales    Organization,    1,    2,    13; 

Warehouses,  5. 

M 
Machinery  Trade,  4,  20,  45,  152, 

155,    156,   177,    182,  252,    283, 

298,  316,  319,  323. 
M ailing-Lists,  82,  194. 
Mail-Order  Houses,  148,  149. 
Manufacturers'  Agents,  154,  179. 
Manufacturers'  Retail  Stores,  127, 

143. 
Market  Analysis,  Advertising,  S3; 

for   Specific    Products,    ()6,    67, 

85,    86,    92;     of    Demand,    70, 

78,  79,  SO;    Statistics,  81;  Use 

of  Mailing-Lists,  82. 
Memorandum,  Selling  on,  180. 
Metal  Trade,  308, 
Missionary    Salesmen,    189,    190. 
Musical-Instrument    Trade,    121. 

128,  135,  190,  203,  236,  243. 

O 

Obsolete  Goods,  Disposition  of, 
243. 

Office-Equipment  and  Appliance 
Trade,  8,  13,  40,  41,  51,  76, 
81,  93,  98,  103,  104,  110,  123, 
135,  252,  257,  272,  274,  284, 
286,  291. 

Op)en-Price  Associations,  177. 

Orders,  Handling  of,  317,  318,  319, 
323;  Management  of  Salesmen 
in  regard  to,  277,  280,  283; 
Standard  Forms,  324. 


Packing  and  Shipping,  113,  182, 

316,  320. 
Packing  Trade,  205. 
Paint  and  Varnish  Trade,  38,  43, 

64,  96,  216,  220,  255,  258,  275, 

329. 
Paper  and  Paper-Product  Trade, 

87,  S8,  107,  113,  135,  245,  24S. 
Photographic-Product  Trade,   92. 
Price  Cutting,  172,  173,  233. 
Price  Maintenance,  174. 
Price  Policy,  Levels,  151,  152,  153, 

154,  159;  on  Special  CTrders  or 

Di.scontinued  Lines,    155,    156; 

Price   Decline.    160,    167,    168, 

169,  231,  232;    Publicity,  175, 

176;  Uniformity,  170,  171. 
Product  Policy,  Analysis  of  Selling 

Points,  71;  Full  Line  vs.  Special- 


ties, 124;  Increasing  Line,  72, 
73,  123,  125,  126,  1S7;  Off- 
setting Seasonal  Demand  Fluc- 
tuation, 74;  Methods,  69;  Qual- 
ity, 120,  121;  Reducing  Line, 
76,  128,  129;  Standardization, 
75. 

Production,  Cooperation  with 
Sales  Department,  59,  112,  248. 

Profit  Sharing,  265,  266,  273. 

Public  Utility  Corporations,  106. 

Purchasing,  Cooperative  Buying 
.Associations,  146;  (>)()rdination 
with  Sales,  114;  Standardiza- 
tion of  Order  Form,  324. 

Q 

(Qualifications,  See  Salesmeji,  Selec- 
tions of. 

Quality,  Guarantee,  116,  118; 
Policy,  120,  121. 

Quotas,  See  Salesmen,  Manage^ 
ment  of. 

R 

Rating-Scale,  33,  39,  40,  41. 

Razor  Trade,  110,  210. 

Reduction  of  Line,  See  Product 
Policy. 

Retailers,  Cooperation  with,  206, 
207,  208,  211,  213,  214,  215. 

Returned  Goods,  See  Cancelations. 

Roofing  Trade,  96. 

Routing,  See  Salesmen,  Manage- 
ment of. 

Rubber  Trade,  6,  9,  14,  46,  47, 
49,  157,  217. 

S 

Saddlery,  72. 

Salary,  See  Salesmen,  Compensa- 
tion of. 

Sales  Campaigns,  115. 

Sales  Contests,  290. 

Sales  Control,  293,  294,  295,  296, 
298,299,301,  302,  :^3. 

Sales  Conventions,  291. 

Sales  Corporations,  190,  330. 

Sales  Development  as  Basis  for 
Stock  Issue,  328. 

Sales  Executives,  Functions,  27, 
29,  31,  275;  Qualifications,  28; 
Selection,  30;  Supervisors,  32, 
277. 

Sales  Expense,  294,  295,  296. 

Sales  Headquarters,  Location,  1,2. 

Sales  Manager,  See  Sales  Execu- 

Sales  Manuals,  31.  107.  108.  109, 
110. 


{VM\         PROBLEMS   IN  SALllS  MAXACiKMENT 


Siili'.sii It'll,  ( 'oiiipciisiilioii  (if,  Auto- 
iiiohili-.s,  2S\),  -JIM);  lioiuis,  2()2. 
•JOii,  liOJ;  Coiiiiiiission,  •>'i\),  'JdO, 
2«)1,  '2m,  -Jli);  Coiitiacts,  271, 
272;  Driiwinn  Accounts,  2S(i; 
Kxpcnscs,  2()(),  2SS;  for  Several 
Classes  of  Salesmen  in  Saiiii' 
Concern,  2t)7,  2(>.S,  274;  I'lofil 
Sli;irin|i,  2(i.'),  2()t),  27:5;  Salar.\- 
])his-( 'oniniission,  2.')S,  2()2. 

Salesmen,  ("ontrol  of,  2S7. 

Salesmen,  Increase  in  Nimiher. 
IflS. 

Salesmen,  Mana>ieiiienl  of,  Auto- 
mobiles use  of,  2S9,  29(1; 
Determination  of  Xumher  of 
Accounts,  9!);  Determination  of 
Value,  27S;  2S1;  Quotas,  104, 
105,  100;  Houtinn,  97,  100, 
102,   2S2,   2,S.5;   Side-lines,   2S4. 

Salesmen,  Pooling  of,  190,  191. 

Salesmen,  Selection  of,  Applica- 
tion Blanks,  .SS;  Interview,  '.i7, 
4'.i;  Qualifications,  :i3;  Rating- 
Scale,  lili,  89,  40,  41. 

Salesmen,  Stimulation  of,  290, 
291,292. 

Salesmanship,  Schools  of,  252,  253. 

Salesmen,  Training  of,  252,  253, 
254,  255,  2.56,  257. 

Salesmen,  Types  of.  Junior,  35; 
Missionarv,  189,  190,  Specialtv 
Salesmen," 34,  42,  228. 

Sales  Organization,  According  to 
Type  of  Customer,  26;  Adapta- 
tion to  \'olume  and  to  Provide 
for  Expansion,  21,  22,  23,  24; 
Committee,  11,  12;  Depart- 
mentalization, 13,  14,  15,  16, 
26,  329;  Financial  Limitation, 
17,  18,  305,  306;  For  Field 
Supervision  of  Salesmen,  477; 
For  Contract  Sales,  25;  P'or 
Sale  to  Manufacturers,  20; 
Functional,  9.  10;  Line-and- 
Staff,  7,  S;  Location,  1,  2,  3,  4; 
Manufacturer-to-Hetailer,  19; 
Militarv.  6. 

Sales  Policv.  Direct  Sales,  136. 
137,  139,  140;  Selling  on 
Memorandum,  180;  Service, 
1.30. 

Sales  Promotion,  Organization,  5<), 
57;  Relation  to  Finances,  .305, 
306. 

Sales  Quota  See  Salesmen,  Man- 
ngeinent  nf;  Sales  Territnn/. 

Sales  Records,  293,  298,  299,  :;(l!. 
302,  303. 

Sales     Research,     Aflaptatifin     to 


Specilic  I'interijrist's,  ()6,  67,  92; 
.\s  Basis  for  Selling  Problems 
and  Methods,  68,  87,  88,  89, 
90,  91;  Methods,  (54,  65;  Scope, 
61 ;  Sources  of  Information,  62. 

Sales  Supervisors,  See  Sales  Execu- 
tires. 

Sales  Terms,  See  Deferred  Paij- 
inetits;  Discounts;  Memoran- 
(liDii,  Selling  on. 

Sales  Territorv,  Allotment  and 
Divisions,   94.   95,   96,    97,   98, 

100.  101,  102;  .Assignment  of 
(Quotas,  103,  106. 

Samples,  195. 

Schools  for  Salesmen,  See  Sales- 

nieii,  Training  of. 
Seasonal (Joods,  74. 
Selling    Points,    Analysis    of,    71. 

See  also  Market  Analysis. 
Service,  130. 
Shipping,  See  Packing  and  Shi/>- 

ping. 
Shoe  Trade,  1,  34,  44,  63,  75,  79, 

102,    122,    126,    127,    134,    135, 

141,    143,    163,    187,   204,   232, 

240,  259,  264,  282,  302. 
Side-lines,  See  Salesmen,  Manage- 
ment of. 
Soap,  See  Toilet-Goods  Trade. 
Specialties,   Distribution  of,   135, 

299;   Market  Analvsis  for,  84; 

Salesmen  for,  34,  39,  42,   190, 

228. 
.Standardization  of  Products,  75. 
Staples,  84. 
Stationery  Trade,  107. 
Statistics,     81.     See     also     Sales 

Control. 
Steam-fitting       and       Plumbing 

Trade,  3,  7,  60,  73,  136. 
Storing  and  Warehousing,  5,  321. 

322. 
Stoves,    See  Heating-  and  Ilhnni- 

nating-A  pfiarattts  Trade. 
Sugar,  See  Food  Trade. 
Sur[)lus    Stocks,    Dis])osition    of, 

240,  241. 

T 

Terms  of  Sales,  See  Sales  Terms. 

Textile   Trade,    15,    70,    78,    112, 

129,    135,    136.    141,    148,    168, 

179,  T80.  205,  20S.  226,  310. 

'fin's.  See  Aidoniohile  and  Acces- 

snri/  Trade. 
Tobacco  Trade,  37.  178. 
Toilet-Coods    Trade,    5,    12,    30, 

101,  140.  147,  172,  178,  190, 
242,  289. 


INDEX 


63^ 


Tool  Trade,  59,  71,  116,  147,  168, 

189,  231,  307,  322. 
Trade  Associations,  See  Coopera- 
tive   Associations;    Wholesalers, 

Grocers. 
Trade-Marks,  133. 
Traffic;  Department,  Cooperation 

with  Sales,  60. 
Turbines,  85. 
Typewriters,  See  Office-Appliance 

Trade. 

U 
Unfair  Trade  Practices,  249,  250, 

251. 

V 
Ventilating-Equipment  Trade,  42, 

94. 


VV 

Wall-board  Trade,  96. 

Warehousing,  See  Storing  and 
Warehousing. 

Wat(;hes,  See  Clocks  and  Watches. 

Wholesalers,  Contracts  with,  223, 
224,    225;     Cooperation     with, 

•  209,  215,  217;  DruKgists,  168; 
Dry  Goods,  175,  225,  267,  268, 
297,  309;  Grocers,  26,  29,  132, 
138,  150,  167,  170,  171,  186, 
190,  199,  202,  223,  224,  235, 
239,  244,  261,  265,  295,  296, 
300,  311,  212,  318;  Hardware, 
246,  288. 


8693 


UNIVERSITY  OF  CALIFORNIA   AT   LOS   ANGELES 
THE  UNIVERSITY  LIBRARY 
!,„-'    ;    T-,TTi?  r,n  the  last  date 


Ui>l^»i:-K;:-liY  OF  CAUFORMIA 

AT 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


